Welcome to November—what a month this is going to be! With a strong U.S. focus, today we have the NFP number, in a few days the U.S. election results will be known, and on November 7, we have the FOMC meeting. Where do I start?
Yesterday’s ADP jobs report was stronger than expected at +233K vs. consensus of +111K and September’s +159K. This was much better than anticipated given recent disruptions from hurricanes and strikes. The consensus for the NFP number is creeping higher to 125K, whereas earlier in the week it was closer to 100K. The dollar’s performance was strong last month—the "Trump trade" has benefited the USD in recent weeks. If Trump were to win the November 5 election, he would not need Congressional support for tariff increases, meaning these could be enacted relatively quickly. The inflationary consequences could mean that the Fed’s easing cycle could end by January. If markets have been too hasty in placing "Trump trades," it’s very likely that the USD will fall back on a Harris win. There may also be some scope for a "sell on the fact" reaction, but all signs point to "Volatility being King," and we’re in for a rollercoaster ride.
Overnight, Asian equity indexes fell, on course for their longest weekly losing streak in more than two years. They were dragged down by sluggish earnings in the region and tech stock declines. Bitcoin fell 0.6% to $69,548.20, Ether fell 0.4% to $2,507.32, the yield on 10-year Treasuries declined one basis point to 4.27%. West Texas Intermediate crude rose 2% to $70.64 a barrel, and spot gold rose 0.3% to $2,753.50 an ounce.
