- Election odds/probabilities for Trump have steadily risen as the Asia Pac session unfolded. The path to victory for Harris is a narrow one from here. Decision Desk HQ has Trump election odds at over 90%, likewise for betting markets.
- Focus is likely to shift to whether we see a Republican clean sweep. FoxNews has called the Senate for the GOP, but uncertainty remains around the house outcome.
- Trump related trades have surged so far today, with the USD higher across the board, particularly EM/trade sensiitve plays. US yields are also up strongly on the reflationary theme.
- A clearer picture on the US election result should emerge as Wednesday continues. In terms of data, there are euro area final October services/composite PMIs, euro area September PPI and September German factory orders. The ECB’s Lagarde, De Guindos and Buch speak.
US ELECTION (MNI): The NYT needle has pushed out of 'lean-Trump' into 'likely-Trump' for the first time this evening amid strong exit poll data for Trump among Latino voters in Michigan and a slight lead for Trump in critical Pennsylvania.
US ELECTION (MNI): Failing a major surprise in late ballots in Pennsylvania, Wisconsin, and Michigan, the House of Representatives now appears the only pathway for Democrats to block a Republican sweep of government and constrain Trump's agenda.
US ELECTION (MNI): Fox Projects GOP To Control Senate: Fox News has issued its projection that the Republicans will control the Senate after the election, no matter the outcome of the presidential race.
MARKETS
CROSS ASSET: Trump Trade Pullbacks Supported As EU/London Cross Over Approaches
As we approach the EU/London cross-over we are seeing some Trump related trades sit off Asia Pac highs, albeit only marginally and pullbacks looked to be supported.
- Uncertainty around whether the Republicans will achieve a clean sweep may be tempering the market outlook slightly. The Decision Desk HQ has Trump at 92% probability for the Presidency, but the House race has drifted in favour of the Democrats, las 57%. Still, a final outcome may take some time to determine. Earlier FoxNews projected the Republicans to control the Senate.
- The USD BBDXY index was last 1270, still up 1.25% for the session. Earlier highs were at 1273.76, close to earlier YTD highs. USD/JPY pulled back 100pips off earlier highs, but has found support, last near 153.60. EUR/USD is up to 1.0765 (session lows were 1.0719).
- USD/CNH is back under 7.1800, but still 1% weaker for the term in yuan terms. while MXN losses were beyond 3% at one stage, but now are around 2.6%, (last near 20.65).
- Bitcoin is near 74.5k, still up nearly 8%, but also just off highs above 75k.
- The US 10yr yield got as high as 4.465%, but is now back to 4.395%. Gains across the benchmarks are still 8-13bps, with a steepening bias.
- US equity futures are also away from best levels, Eminis still +1% firmer though. the regional equity backdrop is mixed, with Hong Kong markets down sharply, but Japan outperforming.
- Gold is down slightly, while metals are hold -2% losses for copper and iron ore. Oil is also weaker.
US TSYS: Late Afternoon Update: Yields Off Afternoon Highs.
- The sell off in US treasuries has slowed into Asian late afternoon with yields 7-12bps higher across the curve, lower than previous highs.
- US 2YR +7bp, US 5YR +10.5bp, US10YR +12.5bp and US30YR +12.2bps.
- The US 10YR Dec24 Future had dropped dramatically from 110-20 to 109-08 as Trump’s odds firmed, before staging a modest comeback to 109-21 as European markets start to open and adjust to the news.
JGBS: Pressured By US Tsys As Trump Win Priced In
JGB futures are sharply weaker, -50 compared to the settlement levels, in line with movements in cash US tsys as the US election unfolds.
- Outside of the previously outlined BoJ Minutes from the September policy meeting, there hasn't been much by way of domestic drivers to flag.
- The NYT needle has pushed out of 'lean-Trump' into 'likely-Trump' for the first time this evening amid strong exit poll data for Trump among Latino voters in Michigan and a slight lead for Trump in critical Pennsylvania.
- Nate Cohen at the Times notes: "[Trump] has an advantage in each of Pennsylvania, Michigan and Wisconsin. To win, Harris would need to sweep all three. There is still a lot of vote left, but in the voting so far, Trump is narrowly but discernibly ahead."
- Trump-related trades continue to gain ground. Bitcoin is now up above 5%. US equity futures are up ~1.0% for Eminis. US yields are up 10-16bps with a steeper curve.
- Cash JGBs are 1-5bps cheaper across benchmarks, with the futures-linked 7-year leading. The benchmark 10-year yield is 4.4bps higher at 0.986%.
- Swap rates are 3-5bps higher, with a steepening bias
- Tomorrow, the local calendar will see Labor and Real Cash Earnings, and Tokyo Avg Office Vacancies data alongside 10-year supply.
AUSSIE BONDS: Very Heavy With Tsys As US Election Results Unfold
ACGBs (YM -9.0 & XM -12.0) are sharply weaker in line with movements in cash US tsys as the US election unfolds.
- The NYT needle has pushed out of 'lean-Trump' into 'likely-Trump' for the first time this evening amid strong exit poll data for Trump among Latino voters in Michigan and a slight lead for Trump in critical Pennsylvania.
- Nate Cohen at the Times notes: "[Trump] has an advantage in each of Pennsylvania, Michigan and Wisconsin. To win, Harris would need to sweep all three. There is still a lot of vote left, but in the voting so far, Trump is narrowly but discernibly ahead."
- Cash US tsys are currently 11-19bps cheaper, with a steepening bias, in today’s Asia-Pac session.
- Trump-related trades continue to gain ground. US equity futures are up ~1.0% for Eminis.
- Cash ACGBs are 8-12bps cheaper with the AU-US 10-year yield differential at +23bps.
- Swap rates are 8-12bps higher, with the 3s10s curve steeper.
- The bills strip has sharply bear-steepened, with pricing flat to -12.
- RBA-dated OIS has no easing is priced for this year, with June 2025 being the first meeting where a 25bp rate cut is fully anticipated.
- Today, the local calendar was empty. Tomorrow will see Trade Balance and Foreign Reserves data.
STIR: RBA Dated OIS Firmer As US Election Unfolds
RBA-dated OIS pricing has firmed by 2-8bps today, placing 2025 meeting pricing 3-11bps higher than pre-RBA levels yesterday.
- Notably, pricing for 2025 meetings is also 4-18bps above pre-Q3 CPI levels.
- No easing is priced for this year, with June 2025 being the first meeting where a 25bp rate cut is fully anticipated.
- The key focus today is the unfolding U.S. Election, with results coming in steadily. Cash US tsys are 9-13bps higher in today's Asia-Pac session.
- Though it's still early, Decision Desk HQ has increased Trump's chances of winning to nearly 72%. The former president is performing strongly in Georgia, while Harris’s anticipated suburban support surge hasn't materialized, especially in Virginia, where she is underperforming Biden’s 2020 vote share, though still likely to win the state.
- In the past few minutes, Trump's chances of winning Georgia have surged to nearly 90% on Kalshi.
NZGBS: Closed Sharply Cheaper As Trump Trade Weighs On US Tsys
NZGBs closed on a heavy note, with benchmark yields 11-12bps higher.
- Q3 labour market data showed that the weak economy is weighing on jobs with employment falling 0.5% q/q and Q2 revised down to +0.2% q/q, weaker than expected, leaving annual growth down 0.4%.
- Wage growth is slowing as the labour market softens. Private wages rose 0.6% q/q after 0.9% in Q2, the slowest quarterly pace since Q1 2021, which should reassure the RBNZ that the labour market is now helping with the process of disinflation.
- Nevertheless, the key focus today is the unfolding U.S. Election, with results coming in steadily. Decision Desk HQ still has election odds firmly in favour of Trump, close to 69%.
- Trump-related trades continue to gain ground. US equity futures are up ~1.0% for Eminis. US yields are up 12-19bps across the curve.
- Swap rates closed 13-14bps higher.
- RBNZ dated OIS pricing closed 4-6bps across meetings. A cumulative 92bps of easing is priced by February, with 53bps by year-end.
- Tomorrow, the local calendar will see RBNZ officials in front of parliament's finance select committee to discuss the Financial Stability Report.
- Tomorrow, the NZ Treasury also plans to sell NZ$200mn of the 0.25% May-28 bond, NZ$250mn of the 4.50% May-35 bond and NZ$50mn of the 5.0% May-54 bond.
NEW ZEALAND: Sharp Drop In Employment As Redundancies Increase
Q3 labour market data showed that the weak economy is weighing on jobs with employment falling 0.5% q/q and Q2 revised down to +0.2% q/q, weaker than expected, leaving annual growth down 0.4%. But the unemployment rate rose less than expected as the participation rate fell more than forecast. Despite the unemployment rate printing below RBNZ expectations, the data is weak enough for another 50bp cut this month.
NZ employment y/y%
- The Q3 drop in employment was the sharpest since Q1 2009 outside of the pandemic period and was a crisis time. The softening of the economy is not only reducing labour demand but now seems to be resulting in job shedding.
- Statistics NZ notes that “compared with last September quarter, there were about a third more people reporting they had left their last job through redundancies or business shutdowns.”
- The data breakdown reflects weak growth with full-time employment down 0.7% q/q and 0.7% y/y after -0.2% & flat in Q2. Part-time is stronger as it was flat on the quarter and up 1.0% y/y but down from 1.2% y/y. There is some labour hoarding still but hours are being reduced to reflect less demand. They were down 1.1% y/y after -0.7% y/y.
- The unemployment rate rose 0.2pp to 4.8% lower than the RBNZ’s 5% August forecast, but it is still the highest since Q2 2017 outside of Covid. The participation rate fell 0.5pp to 71.2%, which may reflect some discouragement, but Statistics NZ says that the main reasons were leisure, studying/training, and illness.
NZ unemployment rate %
FOREX: USD Surges Amid Likely Trump Presidency
The USD is up strongly, tracking for its best session since March 2020, as Donald Trump odds of becoming President firmed as US vote counting continues.
- Betting markets have Trump election odds very high, while Decision Desk HQ last had the Trump Presidency near 87% probability. The path for a Harris victory is a narrow one, relying on winning the three 'blue wall' states of Michigan, Pennsylvania, and Wisconsin.
- Focus may switch to the House race, which Decision Desk HQ now has moderately in favor of the Democrats (see this link). This may explain some modest USD retracement from earlier highs. Our political risk analysts note this may be the only path for the Democrats to block a GOP sweep.
- The USD BBDXY index was last up 1.3%, near 1.270.3. Earlier highs were at 1273.76, close to late June/early July highs for the index.
- EUR has lost 1.5%, last near 1.0770 (earlier lows were at 1.0719). USD/JPY got to 154.33 in earlier trade but now sits back at 153.70. AUD/USD is off over 1.5% to 0.6535, fresh lows back to August of this year.
- In EM FX, MXN is off around 2.9%, while CNH has lost over 1%, amid trade/tariff fears from a return of the Trump administration.
- Cross asset signals are strongly in favor of the USD. US yields are up 10-15bps across the TSY benchmarks, with the curve steeper. The 10yr last at 4.42%, up 15bps.
- US equity futures are up firmly, as well, +1.3%.
- A clearer picture on the US election result should emerge as Wednesday continues. In terms of data, there are euro area final October services/composite PMIs, euro area September PPI and September German factory orders. The ECB’s Lagarde, De Guindos and Buch speak.
ASIA STOCKS: A Mix of Reactions on US Election News.
- Markets were mixed across Asia today as news ebbed and flowed on the US Election, with Trump’s odds firming throughout the afternoon.
- In China the PBOC Governor suggested that keeping fiscal and monetary policy was the best way forward for a stable, high quality economic recovery (according to BBG). Despite these markets were mixed with the Hang Seng leading the way down by -2.6% and the CSI 300 flat whilst Shanghai Comp had modest gains of +0.16% and Shenzhen Comp the outperformer at +0.55%.
- In Korea the KOSPI was under pressure from the outset from the US news moving progressively down throughout to be -0.85% lower.
- Malaysia saw a positive day. With little local economic news of significance the FTSE Malay KLCI inched higher to be +0.35%.
- Indonesia had a challenging day as currency volatility weighed heavy on the bond market, dragging equities with it. The Jakarta Composite was down -0.40%.
- Elsewhere in brief Philippines was down -0.25%, Singapore +0.04% and Taiwan had a very strong day at +1.0%
ASIA STOCKS: Outflows Continue with Taiwan Turning Positive.
- Some significant outflows across the region in Asia yesterday with South Korea and India the biggest movers. Taiwan saw a large inflow and Indonesia and Thailand both had positive days, whilst Malaysia’s outflows continued.
• South Korea: Recorded outflows of -$181m yesterday, bringing the 5-day total to -$777b. YTD flows remain positive at +$7.184b. The 5-day average is -$155m, the 20-day average is -$165m and the 100-day average of -$72m.
• Taiwan: Experienced inflows of +$196m yesterday, with total outflows of -$1706m over the past 5 days. YTD flows are negative at -$11,593b. The 5-day average is -$341m, the 20-day average is +$64m and the 100-day average of -$143m.
• India: Saw outflows of -$542m as of Monday, with a total outflow of -$1.677b over the previous 5 days. YTD inflows stand at +$2,972m. The 5-day average is -$335m, the 20-day average of -$394m and the 100-day average of +$43m.
• Indonesia: Posted inflows of +$14m yesterday, bringing the 5-day total to -$89m. YTD flows remain positive at +$2.554b. The 5-day average is -$18m, the 20-day average is -$26m the 100-day average of +$30m.
• Thailand: Recorded inflows of +$43m yesterday, totaling -$168m over the past 5 days. YTD flows are negative at -$3.454b. The 5-day average is -$34m, the 20-day average of -$27m the 100-day average of -$9m.
• Malaysia: Experienced outflows of -$39m yesterday, contributing to a 5-day outflow of -$205m. YTD flows stand at +$375m. The 5-day average is -$41m, the 20-day average of -$10m the 100-day average of +$4m.
• Philippines: Saw outflows of -$1m yesterday, with net outflows of -$63m over the past 5 days. YTD flows are positive at +$30m. The 5-day average is -$13m, the 20-day average of -$3m but better than the 100-day average of +$5m.
OIL: Crude Lower As US Dollar Rallies With US Election News
The US dollar has rallied in expectation of a Trump victory with the BBDXY index up 1.4%. This is weighing on dollar-denominated commodities, including oil. WTI is down 0.9% to $71.34, close to the intraday low, and Brent is 0.9% lower at $74.83/bbl.
- The outcome of the US election remains too close to call but either way it is likely to impact energy policy going forward but also the current sanction environment and how they are enforced. Energy Aspects noted that enforcing sanctions on Iran would reduce global supply by around 1mn barrels.
- The other event being watched is the path of Tropic Storm Rafael. Currently it is threatening around 1.7mbd of production in the Gulf of Mexico, according to Bloomberg.
- Bloomberg is reporting that US crude inventories rose 3.132mn barrels last week after falling 0.573mn the previous week, according to people familiar with the API data. Gasoline inventories fell 900k and distillate 900k. The official EIA data is out later today.
- A clearer picture on the US election result should emerge as Wednesday continues. In terms of data, there are euro area final October services/composite PMIs, euro area September PPI and September German factory orders. The ECB’s Lagarde, De Guindos and Buch speak.
GOLD: Steady As US Election Unfolds
Gold is steady in today’s Asia-Pac session, after closing 0.2% higher at $2743.99 yesterday. For reference, last week bullion hit a fresh all-time high of $2,790.
- The key focus today is the unfolding U.S. Election, with results coming in steadily.
- Decision Desk HQ still has election odds firmly in favour of Trump, close to 69%. Also note: NYT's presidential forecast 'needle' has for the first time in the night moved out of the 'tossup' category, with the election now seen as 'leaning Trump' with a 66% chance of victory according to the Times.
- Trump-related trades continue to gain ground. Bitcoin is now up above 5%. EUR and JPY down a little over 1.2%, with AUD and NOK not far behind. MXN is down 2.4%, last near 20.60, fresh highs in USD/MXN back to 2022. USD/CNH is above 7.1500, around session highs.
- US equity futures are up near 1.0% for Eminis. US yields are up 11-16bps across the curve. The 10-year back to 4.415%. The curve is steeper.
- According to MNI’s technicals team, the trend condition in gold remains bullish, with sights on the $2,800.0 handle next.
THAILAND: November Inflation Expected To Return To Band
Thai CPI inflation remained below the bottom of the central bank’s 1-3% target band in October. Core printed in line with expectations at 0.8% y/y, unchanged from September, while headline was slightly lower than forecast at 0.8% y/y up from 0.6%.
- There was a surprise 25bp rate cut in October but the Bank of Thailand (BoT) has said that rates should stay around neutral and not be too low and so a follow up cut in December is not a given especially if November inflation prints at the bottom of the band. The 1-3% corridor was confirmed by both BoT and MoF last week. Inflation is expected to accelerate this month due to higher oil and electricity prices.
- BoT is forecasting inflation of 1.2% in 2025.
- USDTHB was rising on the US election-related rally in the greenback (USD BBDXY +1.4%) before the CPI data, but it is up a bit more since CPI. USDTHB is 1.2% higher today at 34.99 to be +1.9% since the October 16 BoT rate cut.
Thailand CPI y/y%
PHILIPPINES: September Exports Very Weak as Imports Grow.
- Philippines September exports contracted -7.6% versus a +0.3% in August.
- Market surveys saw expectations for a +2.7% increase.
- Imports rose by +9.9% from a revised +2.9% for August.
- Philippines trade deficit widened to $5.07bn from $4.393bn in August.
- The Philippines Central Bank cut rates at their October meeting and is widely expected to cut again at their last meeting for the year on December 19.
Table of Contents
INDIA: PMI Services Surprise to the Upside.
- India’s HSBC PMI Services for October printed at +58.5, from 57.9 for the prior month.
- Following on from Monday’s PMI Manufacturing result of +57.5 this took the PMI Composite to +59.1, an increase from September’s +58.6.
- Within the PMI Services Employment rose to 54.3 to mark the highest reading since August 2022.
- The RBI has their last meeting for the year on December 06 and market expectations at present are they are on hold
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 06/11/2024 | 0700/0800 | ** |  DE | Manufacturing Orders |
| 06/11/2024 | - |  US | FOMC Meeting / S.E.P. | |
| 06/11/2024 | 0815/0915 | ** |  ES | S&P Global Services PMI (f) |
| 06/11/2024 | 0815/0915 | ** | ES | S&P Global Composite PMI (final) |
| 06/11/2024 | 0845/0945 | ** |  IT | S&P Global Services PMI (f) |
| 06/11/2024 | 0845/0945 | ** | IT | S&P Global Composite PMI (final) |
| 06/11/2024 | 0850/0950 | ** |  FR | S&P Global Services PMI (f) |
| 06/11/2024 | 0850/0950 | ** | FR | S&P Global Composite PMI (final) |
| 06/11/2024 | 0855/0955 | ** | DE | S&P Global Services PMI (f) |
| 06/11/2024 | 0855/0955 | ** | DE | S&P Global Composite PMI (final) |
| 06/11/2024 | 0900/1000 | ** |  EU | S&P Global Services PMI (f) |
| 06/11/2024 | 0900/1000 | ** | EU | S&P Global Composite PMI (final) |
| 06/11/2024 | 0930/0930 | ** |  GB | S&P Global/CIPS Construction PMI |
| 06/11/2024 | 1000/1100 | ** | EU | PPI |
| 06/11/2024 | 1200/0700 | ** | US | MBA Weekly Applications Index |
| 06/11/2024 | 1400/1500 | EU | ECB's Lagarde address at 10th anniversary of Single Supervisory Mechanism | |
| 06/11/2024 | 1430/1530 | EU | ECB's De Guindos speech and Q&A at Distinguished Speaker Seminar | |
| 06/11/2024 | 1500/1000 | * |  CA | Ivey PMI |
| 06/11/2024 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 06/11/2024 | 1725/1225 | CA | BOC Sr Deputy Rogers speech in Toronto. | |
| 06/11/2024 | 1800/1300 | *** | US | US Treasury Auction Result for 30 Year Bond |
| 07/11/2024 | 2330/0830 | ** |  JP | average wages (p) |
| 07/11/2024 | - |  NO | NorgesBank Meeting | |
| 07/11/2024 | 0030/1130 | ** |  AU | Trade Balance |
| 07/11/2024 | 0700/0800 | ** | DE | Trade Balance |
| 07/11/2024 | 0700/0800 | ** | DE | Industrial Production |
| 07/11/2024 | 0700/0800 |  SE | Flash CPI | |
| 07/11/2024 | 0800/0900 | ** | ES | Industrial Production |
| 07/11/2024 | 0810/0910 | EU | ECB's Schnabel remarks at Money Market conference | |
| 07/11/2024 | 0830/0930 | *** | SE | Riksbank Interest Rate Decison |
| 07/11/2024 | 0830/0930 | ** | EU | S&P Global Final Eurozone Construction PMI |
| 07/11/2024 | 0900/1000 | *** | NO | Norges Bank Rate Decision |
| 07/11/2024 | 1000/1100 | ** | EU | Retail Sales |
| 07/11/2024 | 1045/1145 | EU | ECB's Elderson in panel on climate leadership | |
| 07/11/2024 | 1200/1200 | *** | GB | Bank Of England Interest Rate |
| 07/11/2024 | 1200/1200 | *** | GB | Bank Of England Interest Rate |
| 07/11/2024 | 1230/1230 | GB | BoE Press Conference | |
| 07/11/2024 | - | *** |  CN | Trade |
| 07/11/2024 | 1330/0830 | *** | US | Jobless Claims |
| 07/11/2024 | 1330/0830 | ** | US | Preliminary Non-Farm Productivity |
| 07/11/2024 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 07/11/2024 | 1330/1430 | EU | ECB's Lane speech on Public Debt |