Source: MNI - Market News/Bloomberg
US/ELECTION
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 (BBG): “Republican nominee Donald Trump has jumped out to a lead over Democrat Kamala Harris in the race for the presidency, with markets swinging in expectation of his possible victory even as vote counting continued.”
POLITICS (RTRS): “Republican Donald Trump was leading in the U.S. presidential election on Tuesday, broadly drawing more support than he did in his failed 2020 campaign, though the result remained unclear in battleground states that will decide the winner.”
DOLLAR (BBG): “The dollar staged its biggest rally since March 2020 as the early results of the US presidential election indicated that Donald Trump had an edge in some key states, triggering a sharp rise in Treasury yields on speculation his policies would keep US interest rates elevated.”
ECONOMY (MNI INTERVIEW): U.S. service sector activity looks set to stay robust in coming months as new orders boom, though growth could soften a bit into the holidays after a drag on supplier deliveries from two hurricanes and a port strike temporarily boosted the October reading, Institute for Supply Management non-manufacturing survey chief Steve Miller told MNI.
EU
GERMANY (ECONOMIST): “Olaf Scholz, the chancellor, is scrambling to find a compromise, not least as an early vote would probably remove him from office. But no one knows whether Christian Lindner, the FDP leader, wants a deal. The coalition could break up as early as Wednesday evening, when senior figures from the three governing parties meet.”
RUSSIA (BBC): “A series of parcel fires targeting courier companies in Poland, Germany and the UK were dry runs aimed at sabotaging flights to the US and Canada, Polish prosecutors say.”
OTHER
ISRAEL (BBG): “Israeli Prime Minister Benjamin Netanyahu fired Defense Minister Yoav Gallant, saying longstanding disagreements between them over the conduct of the conflicts with Hamas and Hezbollah had become impossible to bridge.”
JAPAN (MNI BRIEF): Some Bank of Japan board members expressed their cautious view on further rate hikes due to uncertainties over global economies and financial markets, according to the minutes of the Sept 19-20 board meeting released on Wednesday.
NEW ZEALAND (MNI BRIEF): New Zealand’s Q3 unemployment rate printed at 4.8%, 20 basis points lower than the market’s expectations and the Reserve Bank of New Zealand’s August predictions, but higher than Q2’s 4.6%, according to data released Wednesday by Stats NZ.
ISRAEL (BBC): “Israel's Prime Minister Benjamin Netanyahu has fired defence minister Yoav Gallant, saying there is a "crisis of trust" between them. The sacking has already prompted protests on the streets of Tel Aviv and political opposition leaders have called for wider public demonstrations.”
CHINA
POLICY (XINHUA): “The People’s Bank of China Governor Pan Gongsheng pledged to increase the intensity of countercyclical adjustments and keep monetary policy accommodative to support the country’s economic growth, Xinhua News Agency reported.”
ECONOMY (YICAI): “Yicai news agency's China Chief Economist Index reached 50.78 in November, up from 50.62 previously and above the expansion mark of 50 for the second consecutive month, the news agency said.”
HOUSING (SECURITIES TIMES): “Several cities including Zhengzhou and Yinchuan have offered housing vouchers to resettle residents as part of urban-village renovation plans, Securities Times reported.”
CHINA MARKETS
MNI: PBOC Net Drains CNY413.7 Bln via OMO Wednesday
The People's Bank of China (PBOC) conducted CNY17.3 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY413.7 billion after offsetting the maturity of CNY431 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4742% at 09:24 am local time from the close of 1.5425% on Tuesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 48 on Tuesday, compared with the close of 45 on Monday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.0993 Weds; +2.87% Y/Y
The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.0993 on Wednesday, compared with 7.1016 set on Tuesday. The fixing was estimated at 7.1019 by Bloomberg survey today.
MARKET DATA
NEW ZEALAND Q3 EMPLOYMENT -0.5% Q/Q; EST. -0.4%; PRIOR +0.2%
NEW ZEALAND Q3 EMPLOYMENT -0.4% Y/Y; EST. +0.1%; PRIOR +0.3%
NEW ZEALAND Q3 JOBLESS RATE 4.8%; EST. 5.0%; PRIOR 4.6%
NEW ZEALAND Q3 PARTICIPATION RATE 71.2%; EST. 71.5%; PRIOR 71.7%
NEW ZEALAND Q3 AVERAGE HOURLY EARNINGS +1.2% Q/Q; PRIOR +1.1%
NEW ZEALAND Q3 NON-GOVT. ORDINARY TIME WAGES +0.6% Q/Q; PRIOR +0.9%
JAPAN JIBUN BANK OCT. F SERVICES PMI 49.7; PRE. 49.3; SEP. 53.1
JAPAN JIBUN BANK OCT. F COMPOSITE PMI 49.6; PRE. 49.4; SEP. 52.0
MARKETS
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.
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.
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.
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.
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 |