Midterm U.S. Election, Military Operation Against Iran, Two Central Bank Interest Rate Hikes, and Some Inflation Data
November 3, 2026
The never-ending U.S. midterm election campaign finally comes to a close today, or does it? Speculation is rampant that the Trump administration will treat the outcome as a heads-I-win-tails-you-lose matter. If the coin lands heads up as in 2016 and 2024 they outperform poll predictions and in this case preserve control of the senate, victory will be claimed. If the vote count goes against them, they will unveil the stolen election narrative and do whatever it takes to grab victory from the jaws of defeat.
Just to prove they aren’t messing around, the government picked election day to synchronize a limited airstrike on Iran’s Qshem Island. Peace negotiations continue, and oil prices only reversed yesterday’s steep decline to a marginal degree.
Central banks in Australia and Armenia raised their policy interest rates today by 25 basis points each to 4.85% and 7.0%, respectively. In a separate move to counter appreciation of the yuan against the dollar, the People’s Bank of China announced that reserve requirements on foreign currency deposits will be raised to 6% from 4%, effective mid-November.
As investors await what has been framed as a people’s verdict on President Trump’s presidential performance over the past two years, dollar movements overnight were mostly up but marginally so. A 0.4% rise against the Israeli shekel was outsized relative to most movements. The U.S. currency climbed 0.3% against the Swiss franc, Chinese yuan and Australian dollar and by 0.2% versus the euro and yen. But the greenback also held steady relative to sterling and slid 0.1% against the Canadian dollar and kiwi.
Ten-year sovereign debt yields have rebounded six basis points in Italy, five bps in the U.K. and France , three bps in Germany and Switzerland and by two basis points in the United States and Canada. The 10-year Japanese JGB held steady at 2.76%.
In U.S. stock futures trading shortly past 08:30 EST, the Nasdaq was 0.4% higher, but the DOW was 0.6% under water. Equity markets had closed with losses today of 3.8% in Indonesia, 3.6% in Taiwan and South Korea, 0.8% in China and 0.3% in Japan. Stock exchanges in Germany, Italy, Spain and the U.K. currently are showing losses ranging from 0.4% to 0.7%. Bitcoin has risen 1.1% thus far. Silver is down 1.0%, and gold is effectively flat.
With inflation’s erosion of household purchasing power weighing heavily on U.S. voter minds this election day, price data released in other countries today is serving notice that elevated inflation is a global phenomena, and the American launched war against Iran is being blamed as a principal cause of this unfortunate turn of events.
- Harmonized consumer price inflation in Ireland in October printed at a 37-month high in October, up from 2.5% in the first two months of 2026 before the war began.
- Bulgarian CPI inflation 6.1% in October had accelerated from 4.5% in July and was not far beneath May’s 33-month peak of 6.9%.
- Georgian CPI inflation rose 0.3 percentage points in October and, at 5.9%, match April’s 38-month high.
- Vietnamese CPI inflation more than doubled from a 30-month low in of 2.5% in January to a 5-month high of 5.09% in October.l
- Turkish consumer prices leaped 2.6% on month in October following September’s 1.8% increase and were 29.8% greater than a year earlier. The transportation component of the CPI showed a year-on-year advance of 36.4%. Producer prices rose 27.4% year-on-year.
- South Korean consumer prices rose only 0.2% on month, but the 2.8% increase compared to October 2025 remained clearly above the Bank of Korea’s 2.0% target.
- No country has matched Switzerland‘s performance for maintaining low inflation over the past half century. Even there, however, a near-quadrupling from 0.4% in July to a 34-month high of 1.5% last month sticks out as aberrational.
The Reserve Bank of Australia’s official cash rate hike of 25 basis points to 4.85% is the fifth such increase since this year’s first policy review in February, and the new rate level is at its highest level since the first week of December 2008. CPI inflation pringed at a 6-month high in September, well above the 2-3% target range. Some of the trappings of today’s widely anticipated action, detracted from its immediate market reception. Number one, three dissenting votes that favored leaving the OCR at 4.60% were cast in the 9-3 decision; the identities of that minority was not revealed. Number two, the bank’s monetary statement today does not explicitly contain forward guidance indicating likely additional rate increases.
Underlying inflation remains broadly based. Capacity pressures appear a little tighter than previously estimated and there are indications that higher fuel prices are being passed through to prices of other goods and services. Inflation is now expected to remain above 3 per cent for the coming year and there is an increasing risk that higher inflation expectations will become embedded.Given the revised inflation outlook and the continuing upside risks, the Board judged that a further tightening in financial conditions is warranted to support the return of inflation to target. The Board will continue to do what it considers necessary to bring inflation sustainably back to target.
After today’s announced 25-basis point increase, the Central Bank of Armenia‘s repo rate will be at a 22-month high of 7.0%. A previous 25-bp hike in September ended an 11-month interval when the rate stayed at 6.5%. In taking today’s step, a statement opines that “the risks that central banks in major economies may raise policy rates further or keep them at elevated levels for an extended period have become more tangible.” Two other forces behind today’s action include a rising trend in rate-neutral central bank rates and persistent regional conflicts. Armenian consumer price inflation has ranged between 4.2% and 5.1% every month since March versus a medium-term target of 3.0%.
Purchasing manager surveys reported today include non-oil indices for Egypt and Saudi Arabia. Egypt’s October PMI matched September’s 2-month low of 47.2 and constitute’s the tenth sub-50 reading in a row. The Saudi PMI followed a 7-month high of 55.3 in September with a 2-month low of 54.0, which remains surprisingly robust in view of Houthi-inflicted damages to Saudi energy sector infrastructure.
The Filipino manufacturing PMI dropped to a six-month low of 49.1 in October from 49.6 in the September and a near-decade high of 54.9 in August. Brazil’s manufacturing PMI ticked higher to 46.1 from 44.8 in September. This 2-month high was the fourth straight sub-50 reading, nevertheless.
Just in: President Trump has announced that around $4 billion of financial U.S. aid to Israel will be ended after this year. This move was agreed previously in talks with Netanyahu and done in conjunction with the greater amount of military aid. Publicizing the decision on the day of U.S. midterm elections doesn’t look coincidental. U.S. durable goods orders are due shortly.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Central Bank of Armenia, Reserve Bank of Australia, Turkish CPI and PPI
ShareThis
