Futures Rise As Trumpflation Trades Slide One Day Before The Election

US equity futures are higher with Mag7 names mixed but NVDA higher on its Dow inclusion with semis also ticking higher; the dollar and yields are lower as the Trump reflation trade took a hit after several polls over the weekend showed a rebound for Kamala Harris. As of 8:00am ET, S&P futures are up 0.1%, while Nasdaq futures are flat; small caps are underperforming as the yield curve bull flattens with the USD weaker on a reversal in the Trumpflation trade. Commodities are catching a bid, led by Energy as OPEC+ decided to delay its production increase again. Today’s macro data is likely to be ignored but given the weaker than expected NFP, investors may want to know the state of the economy as we get past the Election and the Thursday’s Fed mtg. ISM-Services tomorrow is the most important print this week with Sentiment updates on Friday.

In premarket trading, Nvidia and Sherwin-Williams advanced after S&P Dow Jones Indices said on Friday that the pair would be added to the Dow Jones Industrial Average. Nvidia (NVDA US) +2.3%, Sherwin-Williams (SHW US) +4.5%. Intel, which is to be taken out of the Dow Jone, dropped 2.3%, while Apple fell 0.4% after Buffett’s Berkshire Hathaway continued its sale of shares in the iPhone maker. Talen Energy shares slide 13% as the company said it was evaluating its options after the Federal Energy Regulatory Commission (FERC) rejected a nuclear power pact on Friday. In sympathy, we saw sharp drops across the nuclear sector: Constellation Energy (CEG US) -7.4% Vistra (VST US) -3.8%, PSEG (PEG US)-3.8%. Here are some other notable premarket movers:

• Abercrombie & Fitch (ANF US) shares gain 2.4% after Citi opened a 30-day positive catalyst watch on the apparel retailer, expecting another strong profit beat when it reports third-quarter results on Nov. 26.
• Air Transport Services Group shares (ATSG US) jump 22% after a Reuters report on Sunday said that Stonepeak Partners is in advanced talks to acquire the provider of aircraft leasing and cargo transportation services for about $3.1 billion including debt.
• Roblox (RBLX US) shares rise 3.6% after Morgan Stanley upgraded to overweight from equal-weight following the video-game company’s results.
• Viking Therapeutics (VKTX US) shares soar 14% after the biotech’s experimental pill, VK2735, showed increased weight loss in patients at higher doses. Shares in fellow makers of weight-loss drugs fall. Eli Lilly (LLY US) -1.7%, Novo Nordisk (NOVOB DC) -1.1% in Copenhagen

As noted above, the dollar fell and Treasuries rallied as investors eased back bets on Donald Trump winning the presidential election after weekend polls indicated Kamala Harris was gaining ground. The Bloomberg dollar index dropped the most in more than a month, while the Mexican peso — widely viewed as the closest proxy for Trump’s victory odds after it tumbled in the aftermath of Trump’s 2016 victory — was the top performer among 16 major currencies. The argument goes that Trump’s support for looser fiscal policy and steep tariffs will deepen the federal deficit and fuel inflation, pushing up interest rates to the detriment of Treasuries but the benefit of the dollar.

Sentiment shifted after Harris received encouraging signals from an ABC News and Ipsos poll giving her a 49%-46% edge nationally against Trump in the race for the White House, while the New York Times/Siena survey released Sunday showed the Democratic nominee ahead in five of seven swing states. A psy-oped survey by the Des Moines Register that pointed to a lead for Harris in Iowa — a state that Trump has won in both of his previous contests — was a certain outlier, but served to sow doubt in the Trump victory narrative and underscore the ever-shifting dynamics of the race. Still, Harris’ advantage across all of the surveys was within the margin of error, and a NBC News poll released Sunday showed the race deadlocked 49%-49%.

“Somehow markets persuaded themselves that Trump was well ahead and had been priced as if it was quite a clear victory for him, which seems crazy,” Erik Nielsen, group chief economics advisor at UniCredit SpA, told Bloomberg TV. “What you’re seeing now is a realization that we got ahead of ourselves.”

Elsewhere, the Fed is expected to cut rates by 25 basis points Thursday, after the latest jobs data showed US hiring advanced at the slowest pace since 2020 while the unemployment rate remained low. Even so, the numbers were distorted by severe hurricanes and a major strike. Economists also expect the Bank of England to lower its benchmark rate by a quarter point to 4.75%.

European stocks also gained in thin Monday trading, with investor eyes keenly focused on Tuesday’s US presidential election. The Stoxx 600 gained 0.3% to 512.19 with 398 members up, 187 down, and 15 unchanged. Bachem and Burberry lead gains on the Stoxx 600, with Swedish landlord SBB among the day’s biggest fallers after a local business paper recommended its readers sell shares in the firm. Here are the biggest movers Monday:

• Bachem shares gain as much as 7.3%, the most since March, after JPMorgan analysts initiated coverage on the Swiss biochemical manufacturer with an overweight recommendation
• Burberry shares rally as much as 8% to the highest in almost four months, following a report by online fashion publication Miss Tweed that Moncler could be considering making a bid for the British luxury goods firm
• Jenoptik gains as much as 3.8%, the most in more than a month, after Oddo BHF upgrades to outperform from neutral and says that risks to the German optoelectronics firm’s 2025 targets are already reflected in the shares
• Chemring shares rise as much as 4.5% after the supplier to the defense and aerospace markets won two new contracts worth £278m in total and said it remains on course to deliver FY expectations
• ALSO gains as much as 4.4%, the most since July, after ZKB initiated coverage with an outperform recommendation. It cited upside ahead for the Swiss computer hardware and software wholesaler from its Westcoast UK acquisition
• EssilorLuxottica gains as much as 4% after BFM Business reported Meta will invest EU5 billion in the company to take a 4-5% in the firm, quoting unnamed sources
• Anglo American shares climb as much as 2.1% after the miner struck a deal to sell its stake in a joint venture that owns steelmaking coal mines in Australia for A$1.6 billion, with analysts impressed with the valuation
• Swedish real estate group SBB tumbled as much as 27% in Stockholm on Monday after newspaper Dagens Industri advised readers to sell the stock
• Schneider Electric shares drop as much as 2% after the company’s surprise announcement that CEO Peter Herweck has been replaced by Oliver Blum, who currently leads the firm’s biggest division
• Reckitt Benckiser falls as much as 1.8% as Bernstein cuts its recommendation to market perform from outperform following the UK staple-goods company’s biggest rally in about four years on Friday
• PostNL shares fall as much as 2.6% after the letter and parcel distributor warned earnings and free cashflow will be at the bottom end of its previous guidance range as it announced a change in chief executive

Earlier in the session, Asian stocks also climbed, fueled by the weaker dollar, a rise in South Korean shares and hopes for more economic stimulus from the Chinese government. The MSCI Asia Pacific Excluding Japan Index rose as much as 0.9%, putting it on course for its best day in more than two weeks. Taiwan Semiconductor Manufacturing Co., SK Hynix Inc. and Commonwealth Bank of Australia contributed the most to the gauge’s gains. South Korean shares rallied after the nation’s main opposition party said it supported the government’s decision to drop a plan that would have imposed a capital gains tax on retail investors. A jump in Samsung Electronics Co. and LG Energy Solution Ltd. helped fuel a widespread advance in equities. In China, the top legislative body reviewed a proposal to move some local governments’ off-balance-sheet debt onto their official accounts, a highly-anticipated move to ease their financial burden that has been foreshadowed by officials.

In FX, the dollar is on track for its largest fall since late August while Treasury yields also retreated as traders pare so called ‘Trump trades’ in response to the latest US election polls.  The Bloomberg Dollar Spot Index fell 0.7%. The moves came after a poll by the Des Moines Register showed Kamala Harris with a 47%-44% lead in Iowa — a state Trump has won in each of his prior elections. Subsequent rebalancing of Trump trades weighed on the dollar. Still, Harris’ advantage across all of the surveys was within the margin of error, and a NBC News poll released Sunday showed the race deadlocked. “Trump is still favored to win, but the odds have retraced quite a bit of the moves seen in October across a range of markets,” Michael Wan, senior currency analyst at MUFG Bank Ltd., writes in a note. “The Fed is likely to cut rates by 25bps in its upcoming meeting this week, but the result of the US election could matter materially for how the Fed thinks about the longer-term path beyond 2024.”

• USD/JPY fell as much as 0.9% to 151.71 after rising in the last five weeks
• AUD/USD rose 0.7% to 0.6603; NZD/USD gained 0.6% to 0.5997

In rates, US 10-year yields drop 10 bps to 4.29% as Treasury futures reach session highs in early US trading after an opening gap higher, leaving yields 5bp-11bp lower across a flatter curve while the long-end-led gains flatten 2s10s by ~5bp, 5s30s by ~1.5bp. In 10-year sector bunds and gilts lag Treasuries by 10bp and 12bp on the day. The rally in Treasuries has not filtered through to European government bonds which have likely been hampered by a jump in oil prices. UK and German 10-year borrowing costs rise 2-3 bps each.

In commodities, West Texas Intermediate rose 2.5% Monday while Brent crude futures climbed 2.2% to around $74.70 a barrel, as OPEC+ agreed to push back its December production increase by one month while Iran resumed its escalation of rhetoric against Israel. Spot gold rises $5 to around $2,742/oz. 

Today’s US economic data calendar includes September factory orders at 10am; ahead this week are ISM services index and University of Michigan sentiment. Fed officials are in self-imposed quiet period ahead of Nov. 7 policy announcement

Market Snapshot

• S&P 500 futures little changed at 5,759.50
• STOXX Europe 600 little changed at 511.23
• MXAP up 0.6% to 186.25
• MXAPJ up 0.6% to 595.76
• Nikkei down 2.6% to 38,053.67
• Topix down 1.9% to 2,644.26
• Hang Seng Index up 0.3% to 20,567.52
• Shanghai Composite up 1.2% to 3,310.21
• Sensex down 1.2% to 78,782.41
• Australia S&P/ASX 200 up 0.6% to 8,164.59
• Kospi up 1.8% to 2,588.97
• German 10Y yield up 1 bp at 2.43%
• Euro up 0.6% to $1.0899
• Brent Futures up 2.6% to $75.01/bbl
• Gold spot up 0.2% to $2,742.21
• US Dollar Index down 0.53% to 103.73

Top Overnight News

• With scant detail on how Beijing aims to stimulate its way out of its economic downturn, some investors have speculated that the U.S. presidential election might prompt the big “bazooka” markets have hoped for. According to people involved in policy discussions, that is wishful thinking: A bazooka isn’t coming—at least not this year. WSJ
• Chinese authorities are demanding wealthy individuals and companies double-check their taxes for unpaid liabilities in a move that threatens to further dent investor confidence in the world’s second-largest economy. FT
• Germany’s coalition gov’t seems to be on the brink of collapse over budgetary disagreements and probably won’t last until the next scheduled election in Sept 2025. NYT
• UK PM Starmer attempts to reassure markets over the government’s new budget in an FT editorial following last week’s rise in borrowing costs. FT
• Amid U.S. warnings against a counterattack on Israel, Iran is sending a defiant diplomatic message: It is planning a complex response involving even more powerful warheads and other weapons, said Iranian and Arab officials briefed on the plans. WSJ
• Harris’s team shifts its view on the race, and no longer consider themselves to be the underdog (Trump’s team “scoffs” at such a change, and notes that strong early voting numbers from Republicans bodes well for them). WaPo
• The dollar weakened and Treasuries extended gains as investors walked back bets on Donald Trump winning the election after polls gave Kamala Harris a slight edge nationally and in some swing states. Still, Harris’ advantage across all of the surveys was within the margin of error. BBG
• OPEC+ agreed to delay a production hike by one month, from Dec until Jan (it was expected that the Dec restart would be postponed, but a 30-day delay probably won’t provide a major boost to oil prices). BBG
• Berkshire Hathaway slashed its stake in Apple by roughly 25% last quarter, helping boost its cash pile to a record $325.2 billion. Operating profit fell and the firm declined to buy back its own stock for the first time since 2018. BBG

A more detailed look at global markets

APAC stocks began the week mostly positive but with the gains capped amid the holiday closure in Japan and as global markets braced for this week’s major risk events including the US Presidential Election. ASX 200 was led by strength in tech, telecoms and utilities, while financials also benefitted after Westpac’s earnings. Hang Seng and Shanghai Comp were mixed as the former traded indecisively with strength in automakers offsetting the losses in the property sector, while the mainland was underpinned amid tailwinds from an unwinding of the Trump trade and with the NPC Standing Committee convening this week with participants eyeing the approval of over CNY 10tln of additional debt issuance for the next few years.

Top Asian News

• China’s NPC reviews local government debt swap, according to Xinhua; reviewed bill on raising ceiling on local government debt to replace existing hidden debt.
• China’s Commerce Ministry files lawsuit against the EU’s final EV tariff.
• China’s Commerce Minister met with Australia’s Trade Minister on Sunday and said China hopes Australia will continue to improve its business environment and treat Chinese companies fairly and equitably. China’s Commerce Minister also met with French Foreign Trade Ministerial Delegate Sophie Primas and stated the EU’s countervailing investigation on China’s electric vehicles has ‘seriously hindered’ China-EU auto industry cooperation.
• China is not planning “bazooka” stimulus for this year, according to WSJ sources; Chinese authorities reportedly set to signal after the NPC that more steps to support growth are in the pipeline.
• RBNZ said geopolitical tensions were highlighted as a risk to stability, while it noted that concern about geopolitical tensions has been increasing recently and potential impacts from geopolitical risks cannot be underestimated.
• Indonesia extended its tax holiday policy with an adjustment amid global minimum tax implementation, while it is considering extending tax incentives to property and electric vehicles sectors in 2025 and is considering making it longer for exporters to retain earnings in the domestic market beyond three months.

European bourses, Stoxx 600 (+0.1%) are generally modestly firmer, having initially traded tentatively throughout most of the European morning. European sectors are mixed; Autos takes the top spot alongside Energy, with the latter buoyed by strength in underlying oil prices. Tech is found at the foot of the pile, hampered by losses in STMicroelectronics, after it received a couple of broker downgrades. US Equity Futures (ES +0.1%, NQ U/C, RTY U/C) are mixed, with the ES and NQ trading tentatively on either side of the unchanged mark in the run-up of the US Election.

Top European News

• UK Chancellor Reeves said she was wrong to tell British voters before the election that Labour wouldn’t announce new tax increases and she didn’t appreciate the size of the fiscal deficit but noted that Labour won’t need a similar budget during Parliament, according to Bloomberg.
• Former UK Secretary of State for Business and Trade Kemi Badenoch won the race to be the next leader of the Conservative Party after beating Robert Jenrick in the months-long contest, according to Sky News.

FX

• USD is on the backfoot vs. all peers as a shift in polling in the US election towards Harris has seen a scaling back of “Trump trades” across the board, one of which was a stronger USD. DXY slipped below its 200DMA at 103.82 and been as low as 103.62, matching its 21DMA.
• EUR is underpinned by the twin effects from last week’s EZ GDP and inflation metrics as well as a paring back in the risk of a Trump Presidency which carries risk for the Eurozone. As such, EUR/USD has made its way back onto a 1.09 handle, peaking at 1.0904. GBP is not as sensitive to the Trump trade unwind and therefore is getting outmuscled by some peers. Cable has been unable to make its way back onto a 1.30 handle, topping out at 1.2998.
• USD/JPY has been as low as 151.61 with JPY benefitting from a potential reappraisal of the Fed easing trajectory in lieu of the shift in US polling over the weekend. Currently trading just shy of 152.00
• Antipodeans are both enjoying a session of gains vs. the broadly softer USD. AUD/USD briefly made its way back onto a 0.66 handle but was unable to hold above the level.
• GBP is firmer vs. the USD but softer vs. the EUR.
• PBoC set USD/CNY mid-point at 7.1203 vs exp. 7.1208 (prev. 7.1135).
• Turkish CPI MM (Oct) 2.88% vs. Exp. 2.61% (Prev. 2.97%); YY 48.58% vs. Exp. 48.2% (Prev. 49.38%)

Fixed Income

• USTs enter the election week higher, bolstered by polls showing that Harris could clinch victory in Iowa and with betting odds shifting towards a Harris victory overall. Given this, the Trump Trade is paring with USTs 15+ ticks higher at best to a 110-16+ peak. Thereafter, the complex was weighed on amid reports that China’s NPC is reviewing local government debt swaps; USTs trimmed back to a 110-09 trough, but still firmer on the session.
• Bunds are slightly softer, though off a 131.40 trough which is just below Friday’s base but clear of last week’s 131.15 WTD trough. Weighed on by the above election dynamcs and are also softer as domestic political risk heats up once again, following the leak of Finance Minister Lindner’s economic reform plan.
• Gilts are modestly firmer, caught between the diverging leads from Germany and the US. Weekend press round from Chancellor Reeves saw her stress that the Labour party won’t need to announce a similar budget (in the context of tax rises) during the parliamentary term. Pivoting the 94.00 mark, in a 93.88-94.34 range.

Commodities

• Firmer trade across the crude complex amid several factors; (1) OPEC+ is delaying the planned return of production by a month (2) Geopolitical concerns remained heightened (3) China’s NPC Standing Committee is due to meet from Nov 4th-8th (4) The Dollar is on a weaker footing amid an unwind of the Trump trade. Brent Jan’25 sits towards the upper end of a USD 73.88-74.91/bbl parameter.
• Precious metals hold a modest upward bias across precious metals against the backdrop of a softer Dollar, heightened geopolitical tensions, and in the run-up to the US Presidential Election. Spot gold currently remains tucked in a narrow range between USD 2,731.93-2,744.93/oz parameter.
• Positive bias across base metals amid a softer dollar coupled with some optimism (or anticipation) as China’s top legislative body, the National People’s Congress (NPC) Standing Committee, convenes from today through to Friday 8th November.
• OPEC+ agreed to delay the December oil output increase by one month, according to a Reuters source, while OPEC confirmed that Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria and Oman extended the 2.2mln bpd voluntary adjustments for one month until the end of December.
• Libya’s NOC said production rates of the Waha Oil Company reached above 335k bpd.
• Canada is to unveil details of a proposed emissions cap on the oil and gas sector on Monday.
• BP (BP/ LN) CEO says that the conflict in the Middle East is the “top risk we hold right now”.
• ENI (ENI IM) CEO says gas demand is increasing worldwide; volatility in energy markets will continue in 2025.

Geopolitics: Middle East

• Iranian Foreign Ministry spokesman says Iran is to use all of its means and full strength in its response to Israel.
• Iran’s Supreme Leader Khamenei said the US and Israel should know they will undoubtedly receive a crushing response for what they do against Iran and the resistance front, according to state media. It was also reported that Iran’s Islamic Revolutionary Guard Corps said the country will “certainly” launch a new attack against Israel, according to ISNA.
• Iran is planning a strong and complex response to Israel involving even more powerful warheads and other weapons, according to WSJ citing Iranian and Arab officials briefed on the plans.
• US warned Iran that it won’t be able to restrain Israel if Iran attacks, according to Axios. It was separately reported that US B-52 bombers arrived in the Middle East after Washington announced their deployment as a warning to Iran, while the Pentagon said the move aims to protect US personnel and interests in the region, according to AFP and France 24.
• Israeli PM Netanyahu said pushing Hezbollah back beyond the Litani River is key to returning residents to homes in northern Israel. It was separately reported that Netanyahu cancelled his visit to Metula after a Hezbollah drone explosion occurred just 20 minutes prior to his arrival, according to Israeli media reports.
• Israeli troops detained a Syrian citizen in recent months who they said was an Iranian operative in Syria who had gathered intelligence on Israeli troops in the border area. It was separately reported that Israeli commandos launched a seaborne raid into northern Lebanon on Saturday and seized a senior Hezbollah operative, while Israel said that it killed Hezbollah’s rocket unit commander in southern Lebanon, according to Reuters and FT.
• Israel officially notified the UN that it is cancelling the agreement that regulates UNRWA operations in Israel, the West Bank and Gaza, according to Axios’s Ravid.
• Israel’s Channel 12 quoting a senior official noted expectations of reaching an agreement to end the war in Lebanon within two weeks at most, according to Sky News Arabia.
• Hamas senior official Hamdan said dialogue among Palestinian factions in Cairo is positive but added that he didn’t want to jump to any conclusions and noted that Hamas has not received any written proposals regarding a possible ceasefire in Gaza, according to Reuters citing Al Aqsa TV.
• Hamas insists on unified negotiations to prevent Israel from resuming fire after a prisoner release and Egypt continues mediation efforts with Palestinian and Israeli parties to reach a Gaza ceasefire and increase humanitarian aid access, according to a senior security source cited by Egypt’s Al Qahera News.
• Political adviser to Iraqi Prime Minister Fadi al-Shammari told Sky News Arabia that an Israeli strike on Iraq cannot be ruled out but added that they do not want to give justifications for Israel to do so.
• Yemen’s Houthis said it will continue the maritime blockade against Israeli vessels amid intelligence reports of asset transfers and said it will not recognise changes in ownership of Israeli shipping companies, as well as warned against collaboration.

Geopolitics: Other

• Russia’s Deputy Chairman of the Security Council Medvedev said the US is mistaken if it thinks that Russia will not use nuclear weapons in case of a threat to its existence, according to TASS.
• Russian forces took over Vyshneve village in Ukraine’s Donetsk region, as well as captured Pershotravneve and Kurakhivka in eastern Ukraine, according to the Russian Defence Ministry.
• North Korea and Russia reaffirmed a commitment to implement the strategic partnership reached in June and their foreign ministers agreed to hold more dialogues going forward, according to KCNA.
• India’s Foreign Ministry spokesperson said India and China have commenced verification patrolling on mutually agreed positions in both Demchok and Depsang.

US Event Calendar

• 10:00: Sept. Durable Goods Orders, est. -0.8%, prior -0.8%
• 10:00: Sept. Durables-Less Transportation, est. 0.4%, prior 0.4%
• 10:00: Sept. Factory Orders, est. -0.5%, prior -0.2%
• 10:00: Sept. Factory Orders Ex Trans, prior -0.1%
• 10:00: Sept. Cap Goods Ship Nondef Ex Air, prior -0.3%
• 10:00: Sept. Cap Goods Orders Nondef Ex Air, prior 0.5%

DB’s Jim Reid concludes the overnight wrap

Unless you’ve been hiding out on Mars, and if so who could blame you, then tomorrow will shape the direction of the world economy and geopolitics for the next four years. It almost makes the FOMC meeting that concludes on Thursday seem parochial by comparison.

We arrive at this monumental election week with bond markets having been on shaky ground of late with October seeing the worst month for the Bloomberg Global Agg since September 2022 when inflation was only just off its peak, the Fed was still raising by 75bps clips, and the Truss budget and UK LDI pension crisis had exaggerated the sell-off. Last week 10yr US yields rose +14.4bps with +10bps of it on Friday and a little surprisingly after a soft, albeit weather impacted, payrolls report. The most impressive part of last week’s price action though was that it occurred alongside prediction markets pulling back from the Red sweep expectation that peaked the previous week. As an example, last weekend Trump has a probability of 61% on PredictIt versus 52% on Friday and 48% on Saturday while slightly rebounding this morning to currently stand again at 51%. On Polymarket.com Mr Trump was as high as 67% on Wednesday but this dropped to around 59% on Friday and over the weekend fell to as low at 53% (currently 56%), with a Republican sweep now at 39% having been as high as 49% last Tuesday. The dip over the weekend came after a highly anticipated Selzer De Moines Register Iowa poll was released on Saturday. The poll saw Harris with a 3-point lead in a state where polling averages have Trump 9 points ahead. Many political commentators had been waiting for this poll as it has one of the best track records amongst pollsters with FiveThirtyEight describing Selzer as “the best pollster in politics”.

Anyone who has read “Fooled by Randomness” will be aware of Nassim Taleb’s view that its often difficult to assess the difference between luck and skill when it comes to someone with a good track record. Someone always has to have the best track record. That could be skill or it could be say choosing heads five times in a row and getting it right. For now Treasuries are closed due to a Japanese holiday but long bond futures are up over a point which recoups more than half of Friday’s losses. The dollar index, which has been correlated to some degree with a Trump victory, is down just over half a percent and flirting with the largest drop in two months.

Ahead of the vote, our US economists have published “Everything you need to know for election week” which provides a comprehensive overview of the “swing states” that will decide the election, a list of bellwether counties to pay attention to within those states, as well as a precise recap of the time line for vote reporting and media projections of the winner in 2020. They also cover the rules for challenging the voting results in the swing states as well as rule changes at the federal level adopted in the wake of the last election. They note that while a winner is likely to be declared in MI, AZ, WI and NV within the first 24 hours of the polls closing on Tuesday, PA and GA are likely to take longer to assess – potentially 3-4 days or longer if there are recounts. If states are disputed, we may not know until December 11, which is the federal deadline for states to certify their electors. So there remains a large degree of uncertainty around both the result, including the very tight House race, and when we will know it. Our economists’ chart book also details the potential economic and market implications of the election outcome. This includes an assessment of the possible paths for fiscal policy, trade, immigration and regulation as well as their implications for economic growth, the fiscal deficit and financial markets. So it’s well worth having on your bedside table as you monitor the latest through blearly eyes tomorrow night.

On Thursday, when we may or may not know who the next President is going to be, we should almost certainly see a 25bps cut from the Fed and a reiteration from Powell that the Fed’s subsequent meetings will be data dependent. This potential cut is likely to be unanimous but subsequent meetings could easily be less so. The data dependency will mean it might be tough to garner too much from the meeting, especially if the election outcome and with it future fiscal and trade policies are unknown. Even if the election outcome is known the full extent of policy change could take months to become apparent, especially on trade if Trump wins.

With all due respect to the rest of the week’s events they’ll pale into insignificance versus the above. However, the brief day-by-day main highlights outside of this include US factory orders and a 3yr UST auction today; China’s Caixin services ISM, the RBA meeting, US ISM services and a 10yr UST auction tomorrow; German factory orders, Eurozone PPI and a 30yr UST auction on Wednesday; German industrial production, Eurozone retail sales, US productivity, claims and unit labour costs, alongside BoE, Riksbank and Norges rate decisions on Thursday; with the UoM consumer survey on Friday.

In China, the focus will be on the Standing Committee of the National People’s Congress meeting expected to be held today through Friday as investors seek more details on stimulus measures. Our economists note that a fiscal stimulus package could be announced after the meeting on Friday.

For the BoE, our UK economist expects the central bank to make a quarter point cut for the second time this cycle, taking Bank Rate to 4.75%. He also highlights that the BoE’s projections that are also due next week will incorporate this week’s Autumn Budget (our economist breaks it down here). See his full preview of the meeting here.

Asian equity markets are mostly on the rise this morning, with the KOSPI (+1.50%) leading the gains, followed by the S&P/ASX 200 (+0.73%), the CSI (+0.72%), the Shanghai Composite (+0.53%), and the Hang Seng (+0.11%). Elsewhere, Japanese markets are closed for a holiday with S&P 500 (+0.24%) and NASDAQ 100 futures (+0.38%) both higher. Oil prices are climbing, with Brent futures up by +1.57% to $74.25 per barrel after OPEC+ agreed to delay its December production increase by one month.

Looking back on last week now and markets struggled across the board, as investors grappled with a weak US jobs report, disappointing earnings from big tech, along with growing uncertainty around the US election. Overall, that meant the S&P 500 lost ground for a second consecutive week, thanks to a -1.37% decline (+0.41% Friday), whilst the STOXX 600 in Europe fell -1.52% (+1.09% Friday). That was echoed on the rates side, with the 10yr Treasury yield ending the week up +14.4bps higher at 4.38%, its highest since early July. That included a +10.0bps sell-off on Friday despite the weak payrolls print. Likewise in Europe, yields on 10yr bunds were also up +11.4bps (+1.6bps Friday) to 2.40%, their highest since July as well.

Those losses came against the backdrop of an underwhelming jobs report on Friday, where nonfarm payrolls grew by just +12k in October (vs. +100k expected), marking the weakest growth since December 2020. In fact, the number was only positive thanks to an increase in government payrolls, as private payrolls actually fell by -28k. To be fair, the report was impacted by weather-related disruption from Hurricane Milton, along with the recent strikes. But even so, the previous two months were also revised down, and the 3-month average of payrolls now stands at just +104k, which is the weakest of this cycle so far. Elsewhere, the unemployment rate was at 4.1% as expected, but if you look at the next decimals, it was actually up almost a tenth from 4.051% to 4.145%.

One factor dragging down markets were those losses among big tech firms, and the Magnificent 7 fell -1.84% (+1.07% Friday). Indeed for the NASDAQ, it meant the index ended a run of 7 consecutive weekly gains, posting a -1.50% decline (+0.80% Friday). Otherwise, there were notable losses among UK gilts following the government’s Budget, with yields on 10yr gilts rising every day of the week. By Friday, that meant they were up +21.2bps over the week (-0.1bps Friday) to 4.45%, reaching their highest level in a year. The spread of 10yr gilt yields over bunds also widened by +9.8bps over the week (-1.7bps Friday) to 204bps.

Finally, oil prices fell back last week, with Brent crude down -3.88% (-0.08%% Friday). However, there were significant moves across the week, with a sharp downturn on Monday (-6.09%) after Israel’s strikes on Iran over the previous weekend were focused on military targets rather than any oil facilities. But later in the week, there was then a recovery in prices, particularly after Axios reported that Israeli intelligence suggested Iran was planning a retaliatory strike against Israel using its proxies in Iraq.

It’s fair to say reviewing the week in 7 days’ time from now will be fascinating!