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Daily Economic Update
10.09.2025Oil: Prices rise after Israel’s strike on Qatar. Brent futures rose 0.6% d/d yesterday and were up a further 1% this morning in Asian trading to around $67/bbl following Israel’s attacks on Hamas members negotiating a peace to the Gaza conflict in Doha. Oil prices (and gold) initially rallied yesterday by almost 2% after the attack but pared back gains after the US assured Qatar that Israel would not strike on Qatari soil again. Outside of condemnation of Israel’s violation of Qatari sovereignty, the international reaction was fairly muted, and it seems unlikely at this, admittedly early, stage that diplomatic reprisals will be on the cards. The attacks do have wider implications for the region, however, setting a precedent of seeming impunity for the aggressor which could carry with it a much higher geopolitical risk premium especially if such an action was to take place on a larger oil exporter, such as Saudi Arabia or the UAE. Qatar produces 600 kb/d of crude, the second lowest in the Gulf after Bahrain, though of course, this is dwarfed by its natural gas endowments.
Kuwait: August real estate sales at the highest level since mid-2018. The real estate sector continued to witness strong overall activity over the summer months, with sales in August coming in at KD472 million, almost 84% higher than the same month in 2024 and the highest monthly reading in more than seven years. Annual gains were driven by the residential (+51% y/y to KD133m) and commercial sectors (+293% y/y to KD240m), the former benefitting from August 2024’s low base, while the investment sector logged a decline (-8% y/y to KD99m) in August. Month-on-month, though, gains were driven exclusively by the commercial sector (+128% m/m), which was linked to land plot sales in coastal Sabah Al-Ahmad (Al-Bahriya), as both residential (-6.8% m/m) and investment sales (-48% m/m) were down on July. The outlook for the real estate sector is positive, with demand and sentiment likely to be boosted by the (anticipated) approval of the real estate financing law, the expectation that interest rates will trend lower, and the proposed draft law on real estate ownership by foreigners (through listed companied and real estate funds), which should provide more clarity and investment opportunities. Furthermore, amendments to the developer law, which are being worked on currently, should help to attract more foreign investments and increase the variety of real estate products in the market as well as help the government’s plans to develop the housing stock.
US: Trump’s firing of Fed Governor Cook temporarily blocked by judge; employment gains much weaker than previously estimated. A US district judge handed Fed Governor Lisa Cook a reprieve to continue her job for now, pending further appeals, after Trump sacked her on alleged mortgage fraud. The matter will likely end up in the Supreme Court for a final verdict. Based on the ruling, Cook should now be able to attend next week’s FOMC meeting. Her swift removal would have allowed Trump-appointed officials to have a majority in the seven-member Fed Board of Governors ahead of the appointment of individual Fed presidents in February. Meanwhile, the Supreme Court will expedite the review of Trump’s ‘reciprocal’ tariffs imposed through emergency orders, scheduling a hearing in the first week of November. Previously, the US Court of Appeals for the Federal Circuit had rendered such tariffs illegal but kept them in place until mid-October. Finally, based on the BLS’s annual preliminary revisions to non-farm payrolls for the 12 months through March 2025, job gains were lower by 911K (a drop of around 0.6% in total jobs) from the initial estimate of a 1.8m increase. The final benchmark revision will be published early next year, and if confirmed, average monthly job increases in the April 2024-March 2025 period would amount to just around 70K versus 196K in the previous 12 months period, underscoring much weaker gains in employment. We note that this is only a preliminary estimate, and the final numbers could be different, whether higher or lower. For example, last year’s preliminary estimate put the revision at a negative 818K jobs, with the final numbers coming in at a negative 589K. These annual revisions are undertaken using unemployment insurance tax records rather than via the sample-based establishment survey that the BLS conducts every month to report monthly job gains. And while this year’s preliminary estimate indicates that the job market has been weaker than previously thought, the positive spin on this data is that productivity gains have been stronger than previously understood. In addition, this also shows that the “breakeven” pace of job growth, to keep the unemployment rate broadly stable, may in fact be lower than earlier thought.
China: CPI turns negative in August, but rate cuts unlikely despite growing deflationary pressures. CPI inflation turned negative in August, declining 0.4% y/y (versus -0.2% expected), and flat m/m. The decline in the headline rate was driven by steeper falls in food prices (-4.3% versus -1.6% in July). Meanwhile, core inflation, which excludes food and energy, rose 0.9% y/y, the highest in 18 months, after a 0.8% gain in July. On the industrial side, the producer price index contracted by 2.9% y/y, an improvement from July’s -3.6%, suggesting factory-gate deflation is easing marginally due to base effects and price controls in key industrial sectors rather than a demand-led recovery. This environment makes it harder for the PBOC to decide on its next steps. While more stimulus is likely, the central bank is cautious about weakening the currency and losing investor confidence. That said, unless fiscal support accelerates or consumer confidence rebounds, deflation risks could weigh on growth momentum into Q4, reinforcing the case for targeted stimulus rather than broad-based rate cuts.