EXECUTIVE SUMMARY
- AP CALLS PRESIDENCY FOR TRUMP
- HURRICANE RAFAEL MENACES FLORIDA KEYS ON PATH TO US GULF
- BOJ BOARD CAUTIOUS AMID UNCERTAINTIES
- NORTH KOREA ENTERS UKRAINE FIGHT FOR FIRST TIME, OFFICIALS SAY
Figure 1: Republicans gain control of Senate, seek control of House
Source: BBC
Figure 2: USD/MXN rallies over 3% on tariff risk
Source: MNI/Bloomberg
NEWS
US ELECTION (MNI): AP Calls Presidency for Trump
The Associated Press has called the presidential election for former President Donald Trump. The call on the presidency comes after AP called Wisconsin for Trump, putting him on 277 electoral college votes, over the 270 threshold. The AP call is viewed as the 'gold standard' of election declarations in the US. A second term in the Oval Office for Trump comes alongside the Republicans retaking control of the Senate with at least 51 seats with seven seats still to be called. Focus now turns to the House and whether a the GOP can achieve a clean sweep.
US ELECTION (MNI): Immediate Analyst Views
With Donald Trump set to return to the White House in January 2025, there will be a flurry of research and analysis in the coming days and weeks on what a second Trump presidency could look like in terms of political, economic, security, and market impacts across the globe. With that in mind, we highlight some initial analyst views in the immediate aftermath of the election in the link above.
US (BBG): Hurricane Rafael Menaces Florida Keys on Path to US Gulf
Hurricane Rafael is quickly strengthening as it churns toward the Gulf of Mexico, threatening to bring damaging winds and heavy rains to populated areas from the Cayman Islands to South Florida. Winds continued strengthening overnight into Wednesday, hitting 85 miles (140 kilometers) an hour. That makes Rafael a Category 1 hurricane on the five-step Saffir-Simpson scale, and it is expected to rapidly intensify to a Category 2 storm before making landfall in Cuba on Wednesday, according to an update from the US National Hurricane Center at 1 a.m. New York time.
GERMANY/ITALY (BBG): UniCredit’s Orcel Says Potential Commerzbank Bid Will Take Time
UniCredit SpA Chief Executive Officer Andrea Orcel said he isn’t planning an imminent takeover bid for German rival Commerzbank AG, inserting a measure of calm into a tense cross-border standoff. “It’s a long process,” the Italian lender’s CEO said in an interview. “We want to have the opportunity to convince all key stakeholders, including the government, that a possible combination creates value.”
BOJ (MNI): BOJ Board Cautious Amid Uncertainties - September Minutes
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. “A different member commented that, while remaining convinced that it was desirable for the Bank to raise the policy interest rate without taking too much time if it was confirmed that there would be no major downward revisions to its outlook, the policy interest rate hike should not be an end in itself,” the minutes showed.
N. KOREA (NYT): North Korea Enters Ukraine Fight for First Time, Officials Say
Western and Ukrainian officials have called the appearance of North Korean forces on the battlefield a major escalation. North Korean troops have entered the fight in Russia’s war against Ukraine, clashing for the first time with Ukrainian forces who are occupying a large chunk of Russia’s Kursk region, according to a senior Ukrainian official and a senior U.S. official.
MEXICO (BBG): Mexico’s Top Court Dismisses Bid to Limit Judicial Overhaul
Mexico’s Supreme Court dismissed a ruling intended to limit the scope of a judicial overhaul passed by Congress, easing concerns of a standoff with President Claudia Sheinbaum that risked setting off a constitutional crisis. The decision to reject the case was approved unanimously after the top court failed to reach the majority needed to pass the ruling. The proposal from Justice Juan Luis González Alcántara sought to uphold the legality of popular elections for Supreme Court members, one of the key aims of the judicial overhaul.
CENTRAL BANK PREVIEWS
MNI FED PREVIEW - NOVEMBER 2024: Cutting Through The Storms
The FOMC is on course to cut the Fed funds rate by 25bp on Nov 7, as it takes another step in paring back restraint. Stronger-than-expected activity and labor market data have removed a second consecutive 50bp cut from the conversation, but a soft if distorted October payrolls report cemented that November would see a cut and not a "skip". Given that Powell has previously endorsed the September Dot Plot as the best guide to policy, we would expect him to have to address whether it’s still current as of November 7. A hawkish reply would involve him setting up a “skip” in December, whereas a simple reiteration that the SEP still states the base case would be taken dovishly.
MNI BOE PREVIEW - NOVEMBER 2024: Focus on Inflation Forecasts
We, along with the vast majority of analysts and markets, would be very surprised to see anything other than a 25bp cut at the November MPC meeting. Inflation no longer consistently overshooting targets and continued moderation in wage growth argue in favour of removing restriction further. However, we think there is a good chance of higher-than-expected inflation forecast. We are concerned that the extra cost of lower paid workers' wage increases plus employer NI increases will be passed through to services inflation.
MNI NORGES BANK PREVIEW - NOVEMBER 2024: Caution to Prevail Again
Norges Bank is unanimously expected to keep the policy rate on hold at 4.50%, with policy guidance once again likely to remain cautious. We think the December meeting (and its associated forecast updates) well be a more appropriate time to signal a tilt in stance. Familiar trade-offs are at play heading into the November decision. Inflation was once again below the central bank’s projections in September, but the krone exchange rate has weakened again.
MNI RIKSBANK PREVIEW - NOVEMBER 2024: Consensus Converges on 50bp Cut
A string of soft domestic activity data has shifted consensus towards a 50bp Riksbank cut in November to 2.75%, with markets tilted heavily towards that outcome. The door was opened to a 50bp cut in the September policy statement, which noted that rates would likely be cut in November and December “if the outlook for inflation and economic activity remains unchanged”, with a 50bp cut “possible at one of these meetings”.
MNI BCB PREVIEW - NOVEMBER 2024: Bolder 50bp Hike Expected
Unanimous survey estimates and market pricing indicate the BCB will deliver a 50bp Selic rate hike to 11.25%, after initiating a short tightening cycle in September. Inflation expectations continue to drift higher and together with the ongoing BRL depreciation, the central bank will be justified in stepping up the tightening pace at this juncture.
MNI NBP PREVIEW - NOVEMBER 2024: Projection Under Microscope
The National Bank of Poland (NBP) will leave interest rates unchanged again, with the Monetary Policy Council (MPC) monitoring the current flare-up in CPI inflation. Although the Polish central bank is expected to join its core and regional peers in cutting rates, this is unlikely to happen until next year, when inflation may start descending towards the +2.5% Y/Y +/- 1pp target. The highlight of the November meeting will be the publication of the inflation and GDP projection as part of the latest edition of the Inflation Report.
MNI CNB PREVIEW - NOVEMBER 2024: 25bp Cut is Base-Case Scenario
The Czech National Bank (CNB) is expected to cut interest rates by 25bp, maintaining a steady pace of monetary easing during the “fine-tuning” phase of the cycle. Persistent inflationary pressure in the services sector will likely prevent the Bank Board from returning to outsized cuts
DATA
EUROZONE DATA (MNI): PPI In-Line With Consensus, Driven by Energy
- EUROZONE SEP PPI -0.6% M/M, -3.4% Y/Y
Eurozone PPI in September printed in-line with consensus at -3.4% Y/Y (vs -2.3% prior) and -0.6% M/M (vs 0.6% prior). This is the seventeenth consecutive month of deflation. On a monthly basis this is non-seasonally adjusted data but it is still worth noting this was the first negative reading since May 2024. The in-line reading was driven by energy producer prices falling more rapidly by 11.6% Y/Y (vs -7.8% in August), the lowest reading since May 2024. This is partly due to a 1.9%M/M fall, but also partly driven by base effects.
EUROZONE DATA (MNI): Bank of Italy's Euro-Coin Indicator Ticks Up in October
The Bank of Italy's Euro-coin indicator (nowcast for EZ trend growth) ticked up to 0.18 in October from 0.14 prior. From the press release: "The indicator was buoyed by the resilience of the labour market, although it was held back by the persistent weakness in the business confidence indicators". The upward revision to today's Eurozone composite PMI won't have been accounted for in the October Euro-coin print, which will have drawn upon the lower-than-expected Economic Sentiment indicator from the EC.
GERMAN DATA (MNI): September Factory Orders Strength Partly 'Core' Driven
- GERMANY SEP FACTORY ORDERS +4.2% M/M
German factory orders surprised to the upside in September, at 4.2% M/M (vs +1.5% cons). August's print was revised by +0.4pp to -5.4%. While the headline figure was driven higher by less persistent large-scale one-offs, also underlying 'core' orders looked solid this month. Despite the monthly rise, sentiment remains close to cycle lows - so the slightly stronger September print should bring little change for the overall bleak picture in German manufacturing.
SPAIN DATA (MNI): October Services PMI Below Consensus, But Still Expansionary
- SPAIN OCT SRVCS PMI 54.9 (FCAST 56.6); SEP 57.0
The Spanish October services PMI remained in expansionary territory at 54.9, but was unable to meet analyst expectations of 56.6 (vs 57.0 prior). The composite PMI was 55.2 (vs 56.3 cons and prior), following Monday's strong manufacturing PMI. There were some indications that the strong services activity levels are feeding through into increased inflationary pressures. Note that Spanish
services HICP inflation was 3.4% Y/Y in September (vs 3.7% prior).
ITALY DATA (MNI): Strong October Services PMI Consistent With Bank of Italy Survey
- ITALY OCT SRVCS PMI 52.4 (FCAST 50.2); SEP 50.5
The Italian services PMI was stronger than expected at 52.4 (vs 50.2 cons and 50.5 prior). After the manufacturing PMI remained in contractionary territory on Monday, October's trends echo the Bank of Italy's latest Business Outlook Survey (released yesterday). As in Spain, higher salary costs drove increased cost pressures for firms, but there was less passthrough into output charges reported in the Italian survey.
EUROZONE OCT FINAL SRVCS PMI 51.6 (FLASH: 51.2); SEP 51.4 (MNI)
GERMANY OCT FINAL SRVCS PMI 51.6 (FLASH 51.4); SEP 50.6 (MNI)
FRANCE OCT FINAL SRVCS PMI 49.2 (FLASH 48.3); SEP 49.6 (MNI)
CHINA DATA (MNI): China's Nov Retail Prosperity Index Remains Above 50
MNI (Beijing) China’s Retail Prosperity Index reached 51.0 in November, down from 51.4 in October, but remaining above the expansion mark of 50.0 for the third consecutive month, the China General Chamber of Commerce said on Wednesday. Recent index results indicate government policy support for exchanging consumer goods was making a significant impact on the consumption of household appliances and automobiles.
NEW ZEALAND DATA (MNI): NZ Q3 Unemployment Prints at 4.8%
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. The rate increased 0.2% q/q, while employment fell 0.5% q/q, 10bp more than expected. Salary and wage rates, including overtime, increased 3.8%. The underutilisation rate fell 0.2 percentage points to 11.6%, while the employment rate dropped 0.6 pp to 67.8%.
FOREX: Greenback Leads on Rates-Driven Trump Rally
- The USD is holding a large part of the overnight gains as the election comes close to a conclusion. Trump looks to have secured the Presidency and the Senate, but the votes are still being counted for the House - the last hurdle toward the Republican Party securing a full red sweep for next year.
- GBP/USD's intraday run lower has stabilised - with the pair recouping close to 80 pips off the lows to trade either side of 1.2900 at typing. With election results all but confirmed, and UK PM Starmer congratulating Trump on his victory, short-term focus will likely remain on rates differentials. The hawkish shift across '25 US rates contrasts with stronger rate-cut pricing for the BoE next year, prompting a tightening of ~10bps in the Jun'25 UK-US rate spread. The move's been closely tracked by GBP/USD, and will likely remain a focus as markets head through both the Fed and BoE decisions this week.
- Volumes have been impressive: GBP futures 4x average for this time of day, EUR 6x average, JPY 3x average.
- Outside of the USD, unsurprisingly the MXN is the poorest performer globally - off near 3% and leading the weakness across EM currencies, as those with keen exposure to tariff risk and international trade conditions also trade offered (HUF, ZAR similarly weak).
- Among G10, EUR weakness pervades and while the single currency is just off lows, EUR/CHF has made a notable break lower - narrowing the gap with support of 0.9333. The break lower in EUR/USD and the low print of 1.0720 saw a solid uptick in volumes - suggesting some decent support ahead of the 1.07 handle. Weakness through here opens 1.0666 as the next major level.
- The data schedule is light ahead, keeping focus on central bank speakers including BoC's Rogers and ECB's Lagarde, de Guindos and Villeroy. FOMC members remain inside their pre-rate decision media blackout, with the rate decision tomorrow still fully priced for a 25bps rate reduction. The Brazilian central bank are seen hiking rates by 50bps later today.
EGBS: German Curve Twist Steepens as US Election Result Digested
The German curve has twist steepened this morning, as global markets digest the US Presidential Result. The negative Eurozone growth implications of increased US tariffs has prompted a dovish repricing in 2025 ECB implied rates, driving a 10bp fall in German 2-year yields.
- 15-year Bund supply is due at 1030GMT/1130CET.
- Bund futures are +36 ticks at 131.81, but the technical trend condition remains bearish.
- Lingering concerns around the stability of the German traffic-light coalition remain, with talks amongst Chancellor Scholz and his partners Lindner and Habeck set to resume this evening.
- 10-year peripheral spreads to Bunds are slightly wider.
- The final October Eurozone composite and services PMIs saw upward revisions, but were not market movers.
- ECB’s Vujcic, Lagarde, de Guindos and Villeroy are all scheduled to speak this afternoon.
GILTS: Off Lows, U.S. Election Dominates, BoE Due Tomorrow
Gilts off lows as repercussions from the U.S. election are continually assessed. Trump’s policy preferences (tariffs) are expected to harm growth outside of the U.S. (generally) and promote inflation.
- Futures around middle of 83-tick range, last +8 at 93.42.
- Yields 5bp lower to 1.5bp higher, curve twist steepens.
- 10+-Year yields registered fresh ’24 highs this morning, 30s tested 5.00% before backing off.
- 2s10s within multi-week range, last 4bp.
- 5s30s within the range seen over recent sessions, last 57bp, +5bp vs. yesterday’s close, which represented the flattest level seen since early June.
- BoE-dated OIS 0.5-8.0bp more dovish through Dec ’25.
- 23bp of cuts priced for tomorrow, 31.5bp priced through year-end, 58.5bp through March and 78bp through June.
- SONIA futures +7.0 to -0.5.
- Next domestic risk event is tomorrow’s BoE decision.
- All 54 names surveyed by BBG look for a 25bp cut.
- BMO the only sell-side name (that we have seen) looking for no change.
- Budget uncertainty may increase BoE caution surrounding further easing and could lead to 3 dissents against a cut at this meeting.
- We think there is a good chance of higher-than-expected inflation forecast.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
Nov-24 | 4.721 | -23.0 |
Dec-24 | 4.634 | -31.6 |
Feb-25 | 4.447 | -50.3 |
Mar-25 | 4.364 | -58.6 |
May-25 | 4.217 | -73.3 |
Jun-25 | 4.172 | -77.8 |
Aug-25 | 4.104 | -84.6 |
Sep-25 | 4.089 | -86.1 |
Nov-25 | 4.058 | -89.2 |
Dec-25 | 4.053 | -89.7 |
EQUITIES: E-Mini S&P Rallies to Fresh High, Back Above 20-Day EMA
Eurostoxx 50 futures are volatile but remain closer to their recent lows. Last week’s move down, resulted in a breach of 4914.00, the Oct 16 low. Note that 4884.06, 38.2% of the Aug 5 - Sep 30 bull cycle, has also been cleared. This exposes 4815.50 next, the 50.0% retracement. Initial firm resistance has been defined at 5015.00, the Oct 29 high, where a break would highlight a reversal. First resistance is 4940.00, today’s intraday high. S&P E-Minis have recovered from their recent lows. A key short-term support has been defined at 5724.25, the Nov 4 low. Price is trading above both the 20- and 50-day EMAs and the continuation higher has resulted in a print above the bull trigger at 5927.25, the Oct 17 high. Clearance of this level would confirm a resumption of the primary uptrend. On the downside, a breach of 5724.25 is required to reinstate a bearish threat.
- Japan's NIKKEI closed higher by 1005.77 pts or +2.61% at 39480.67 and the TOPIX ended 51.66 pts higher or +1.94% at 2715.92.
- Elsewhere, in China the SHANGHAI closed lower by 3.181 pts or -0.09% at 3383.806 and the HANG SENG ended 468.59 pts lower or -2.23% at 20538.38.
- Across Europe, Germany's DAX trades higher by 208.27 pts or +1.08% at 19466.69, FTSE 100 higher by 108.83 pts or +1.33% at 8280.52, CAC 40 up 122.37 pts or +1.65% at 7529.71 and Euro Stoxx 50 up 49.8 pts or +1.02% at 4920.29.
- Dow Jones mini up 1114 pts or +2.63% at 43491, S&P 500 mini up 125.25 pts or +2.15% at 5937.5, NASDAQ mini up 355 pts or +1.75% at 20698.5.
Time: 09:50 GMT
COMMODITIES: WTI Futures Reverse This Week's Earlier Gains, Bearish Theme Intact
A bearish theme in WTI futures remains intact and the latest recovery, including this week’s gains, appears to be a correction. A resumption of weakness would expose $65.99, the Oct 1 low, and $64.16, the Sep 10 low and key support. For bulls, a clear reversal would instead refocus attention on the key S/T resistance at $77.70, the Oct 8 high. Clearance of this level would resume the recent uptrend. Initial resistance is $72.67, the Nov 5 high. The trend condition in Gold is unchanged, it remains bullish and the latest pullback is considered corrective. Recent gains resulted in a breach of $2685.6, the Sep 26 high, confirming a resumption of the primary uptrend. Sights are on the $2800.0 handle next. Price has breached support around the 20-day EMA. An extension lower would signal scope for a deeper correction, towards 2642.7, the 50-day EMA.
- WTI Crude down $1.6 or -2.22% at $70.38
- Natural Gas up $0.01 or +0.19% at $2.674
- Gold spot down $20.45 or -0.75% at $2723.88
- Copper down $11.8 or -2.64% at $435.9
- Silver down $0.4 or -1.23% at $32.27
- Platinum down $13.05 or -1.3% at $988.57
Time: 09:50 GMT
| Date | GMT/Local | Impact | Country | Event |
| 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 | |
| 07/11/2024 | 1400/1400 | GB | Monthly Decision Maker Panel Data | |
| 07/11/2024 | 1400/0900 | CA | BOC Deputy Mendes gives opening remarks before a lecture. | |
| 07/11/2024 | 1430/1530 | EU | ECB's Lane in panel on Lesson Learnt in Past Crises | |
| 07/11/2024 | 1500/1000 | ** | US | Wholesale Trade |
| 07/11/2024 | 1530/1030 | ** | US | Natural Gas Stocks |
| 07/11/2024 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 07/11/2024 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 07/11/2024 | 1900/1400 | *** | US | FOMC Statement |
| 07/11/2024 | 2000/1500 | * | US | Consumer Credit |
| 08/11/2024 | 2330/0830 | ** | JP | Household spending |