The economic calendar was light today as the calm before the storm sets in. This week in addition to a slew of earnings from some of the biggest of names including Apple, Amazon, Alphabet, Microsoft, Meta, McDonalds, Visa, Pfizer and Exxon Mobile amongst others, the economic calendar includes:

  • JOLT job openings
  • Australia QoQ CPI
  • US ADP employment data
  • US Advance GDP,
  • US PCE data and
  • US employment data
  • ISM data

The Bank of Japan will also meet (on Thursday). SNB Schlegal and BOC Macklem will speak this week at various times as well. .

What won't happen is Fedspeak as they are in the blackout period ahead of its interest rate decision on November 7. The BOE will also meet next week (on November 7 too). The RBA will announce its decision on Tuesday November 5th in Australia (at night on Monday in the US). The US election will be on Tuesday November 5th but if the polls are correct, the results might not be known for days if not weeks. Buckle up if Harris pulls a victory right away especially since the swing has moved in Trump's favor.

If Japan is a foreshadow of the US election, watch out. The USDJPY was the biggest mover after weekend elections. The election in Japan delivered a significant setback for the ruling Liberal Democratic Party (LDP), which lost its single-party majority in the lower house following political funding corruption scandal involving senior LDP lawmakers and cabinet members.

Despite retaining more seats than the main opposition, the Constitutional Democratic Party (CDP), the LDP failed to secure the 233-seat majority needed in the 465-member Diet, even with its coalition partner Komeito's 24 seats.

Prime Minister Shigeru Ishiba, newly appointed this month, acknowledged the "severe judgment" by voters and called for the LDP to reflect and better align with public expectations. However, the fractured opposition has not emerged as a strong alternative, leaving Japan’s political future in question.

For the USDJPY it moved sharply higher on the news (weaker JPY) but did back off from highs for the day at 153.87. The price did move down as low as 152.34 but is closing near the mid-point of the day at 153.28, good enough for a rise of 0.64% or near 100 pips.

The next biggest mover was the AUDUSD which had a volatile down, and up and down again day, closing near the lows and down -0.30%.

In the US stock market, the major indice closed higher but the broader S&P and Nasdaq closed near session lows. Nevertheless, the indices did start the week with a gain:

  • Dow +0.65%
  • S&P +0.27%
  • Nasdaq +0.26%

The small cap Russell 2000 was the big winner with a gain of 1.63%

European indices closed higher with gains near 0.70% (give or take across the spectrum of indices)..

In the US debt market, the yields are higher and near highs for the day. The 10 year yield reached 4.30%, the highest level since July 11 and is now up 70 basis points from the September low. The US treasury frontloaded 2 coupon auctions today with both the 2 year and the 5 year having so-so demand. Each had a positive tail.

Concerns about stronger growth and a Trump victory which would imply higher tariffs, higher inflation from the tariffs, lower tax cuts, large deportation of immigrants which would likely increase service inflation and larger deficits. A Harris victory has it's own issues as well with deficits still running hot, but is at least absent mass tariffs and sharp cuts in taxes. However, stimulus will be less as a result of the absence of the tax cuts too.