Markets Unfazed So Far by Likelihood of a Big Republican Win in Today’s U.S. Midterm Election
November 8, 2022
The dollar strengthened overnight by 0.3% on a weighted basis. It went up 0.2% versus the Aussie dollar 0.3% against the euro, Swiss franc, Chinese yuan, New Zealand dollar and sterling and rose 0.7% relative to the Canadian dollar. There was also a 0.1% dip against the Japanese yen.
The ten-year Treasury yield remains unchanged at 4.22%, and U.S. stock futures slightly extended yesterday’s significant gains. European equities are 0.3% higher in Italy and Germany but down 0.2% in the U.K.. Asian stock markets closed mixed, with Taiwan up 0.9%, Japan up 1.3% but losses of 0.7% in Indonesia, 0.4% in China and 0.2% in Hong Kong.
One of the day’s biggest movements has been a 4.3% drop in the price of Bitcoin to a 2-week low. Prices of West Texas Intermediate oil and gold have dropped 1.0% and 0.4%.
Republicans are projected to win back control of the House of Representatives and have a decent shot of taking the Senate chamber as well as well as extending their grip on state legislatures and governorships. While such an election outcome would be fraught with political tension, a hope has emerged that the election will provide an excuse for financial markets, which have suffered through a difficult year, to rally into the end of the year.
Japanese data released this Tuesday revealed a 1.8% September bounce in real household spending after back-to-back declines of 1.4% in July and 1.7% in August. The 12-month rate of increase fell to 2.3%, nevertheless. Also, on-year growth in average cash earnings climbed to a 51-month high of 2.1% in September, and another large drop in Japanese foreign exchange reserves was announced. Reflecting intervention to support the yen, reserves slumped $43.5 billion in October after September’s drop of $54 billion. Lastly, the index of leading economic indicators dropped 5.9 points to a 21-month low in September, and the index of coincident economic indicators edged back to a 2-month low.
A summary of the Bank of Japan’s late-October policy review discloses discussion about possible repercussions of an eventual exit from the bank’s current ultra-loose stance, but majority support for keeping rates very low prevailed in order to lift lagging wage growth. The concern remains that above-2% inflation this year will prove temporary.
Small business sentiment in the United States fell 0.8 index points to a 3-month low in October.
The volume of retail sales in the euro area rose by an expected 0.4% on month in September. This was the first monthly increase since +0.2% in May, cutting the 12-month rate of decline to 0.6% from -1.4% in the prior month. Sales fell 0.7% on quarter in the third quarter.
The AIG-compiled service sector purchasing managers index in Australia fell 0.3 points to a 1-year low of 47.7 in October. The National Australia Bank’s monthly index of business confidence dropped five points to a 10-month low of zero in October and was accompanied by a one-point dip to a 2-month low in business conditions. The Westpac-compiled Australian index of consumer confidence fell this month to a 30-month low.
Dutch consumer price inflation backed off September’s record high of 14.5% to 14.3% in October.
Similarly, Latvian CPI inflation slipped to a 2-month low of 21.8% from September’s record high of 22.2%.
Chilean CPI inflation eased for a second straight time. August had seen a 48-year high of 14.1%, and October’s on-year pace remained in double digits at 12.8%.
In Mauritius, CPI inflation last month matched September’s six-year high of 11.9%.
Taiwanese CPI inflation slid marginally to a 2-month low of 2.7% in October despite an 11.1% rate of wholesale price inflation.
Albanian CPI inflation of 8.3% last month was the most in about 34 years.
Indonesian consumer confidence rebounded to a 2-month high last month from September’s 5-month low.
British same-store sales (+1.2%) were higher than a year earlier in October for a fourth straight time.
Expensive imported energy was reflected in France’s EUR 7.336 billion current account deficit in September, which was its widest gap since June 202o.
A 50-basis point hike in the National Bank of Romania‘s policy interest rate today was smaller than the prior four increase and somewhat less than analysts were expecting. At 6.75%, the new rate level is 550 basis points above the October 2021 starting point of the current rate-tightening cycle and its most elevated point in over 12-1/2 years. Since October 2021, CPI inflation has roughly doubled from 7.9% to 15.9%. A recent drop in fuel prices was noted, however.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland retail sales, Japanese household spending, National Bank of Romania, U.S. election
ShareThis
