EQUITIES: US opening calls

PIFKSA ("PIF") – Final Terms

Combined orderbook in excess of $24bn:

- 5Y: in excess of $14bn, excl. JLM interest

- 10Y: in excess of $10bn, excl. JLM interest

Final terms:

- 5Y: $2.25bn at CT5+120 bps

- 10Y: $1.25bn at CT10+140 bps

- Global books now subject

- Allocations to follow

- HSBC b&d

From market sources

US President Joe Biden has just finished delivering public remarks following his talks with PM Benjamin Netanyahu in Tel Aviv. Biden: "I came to Israel with a single message: you are not alone." Biden: 'There is no higher priority than release of hostages.'

• Biden states that he will ask Congress for an "unprecedented support package" for Israel later this week.
• Biden says that other nations, hostile actors should not think of attacking Israel.
• Biden: "Justice must be done, but don't be consumed by it...The vast majority of Palestinians are not Hamas, Hamas do not represent the Palestinian people....Palestinian people are suffering greatly as well."
• Biden to Israel: "You are a Jewish state. You are also a democracy."
• Biden: "There is an agreement with Israel to allow humanitarian aid to move from Egypt to Gaza."
• It remains to be seen if Biden's trip and warnings against intervention by other actors will be enough to keep the conflict contained between Hamas and Israel.
• Meetings have taken place today between foreign ministers at an Organisation of Islamic Cooperation exec committee event in Jeddah. FM's from senior players in the region inc. Saudi Arabia, Iran, and Turkey held talks. Stance of these three nations could prove crucial in determining whether the conflict spreads further outside of the current Israel-Hamas conflict.
• Wires report the US has also vetoed a Brazilian-proposed resolution on Israel-Gaza at the UN.

Tuesday's strong September retail sales control group reading (which is an input to GDP) of 0.6% M/M has spurred some upward revisions to Q3 GDP estimates, not least yesterday's Atlanta Fed GDPNow from 5.15% to 5.44%.

• Expectations are building that Q3 annualized GDP will come in well above the 3.0% BBG September survey median and 2.1% in Q2, and in any case well above potential growth - led by strong private consumption and residential investment, with government consumption and net exports also likely boosting the headline figure.
• Post-retail sales, Deutsche Bank upped its estimate from 4.1% to 5.2%; JPMorgan similarly, from 3.5% to 4.3%; Goldman Sachs from 3.7% to 4.0%. CIBC noted potential upside risks to their 3.9% projection but also noted that the strength in consumption momentum "implies a very strong start to GDP growth in 23Q$, where we had expected a slowdown just below 1%).
• We get the Q3 advance GDP reading on Oct 26 - less than a week from the FOMC decision on Nov 1 and in the midst of the pre-meeting blackout period for Fed speakers.
• A blowout number won't spur a November hike but will be hard for the FOMC to ignore in the deliberations and communications, with participants at the Sept meeting having seen Q3 growth running at a "solid" pace which may be understating the case.
• There hasn't been a 3%+ GDP reading since 2021 and as recently as June the Bloomberg median expectation was negative.