To the newcomers of the new world ~ “Ballots and market moves”
The U.S. midterm elections were held on November 4. An X news roundup says Democrats captured both the House and the Senate, creating a divided-government situation with the Trump administration (unverified; official vote counts should be treated as authoritative). Nasdaq futures fell nearly 1% at one point overnight, while the Dow rose more than 1,000 points after the market opened (unverified).
The same result sent markets in two different directions within a few hours.
What determines the direction isn’t who wins, but what will—and won’t—change after the win. Divided government makes major legislation harder to pass, shifting policy from “acceleration” to “gridlock.” For markets, a predictable stalemate can sometimes be easier to price than uncertain reforms.
But that’s an inference, not a conclusion.
Now consider the data. The October ISM Services PMI came in at 54.5, below the previous reading of 54.9 and expectations of 54.8, but still in expansionary territory above 50; the prices component was 73.0. ADP reported 86,000 new private-sector jobs in October, above expectations.
Expansion is continuing, and so is price pressure.
That’s the more important variable beyond the election. The services prices component remains high, indicating that inflation hasn’t run its course. Friday’s official nonfarm payrolls report will have a more direct impact on the interest-rate outlook than any ballot.
Meanwhile, after the election, gold rose above around $4,030 per ounce and silver to around $52, while the dollar weakened and Treasury yields fell (specific yields to be verified). On November 4, the U.S. Treasury bought back $6 billion in Treasury securities with maturities of 10 to 20 years, receiving bids of more than $39 billion; total U.S. debt stood at around $40.5 trillion, with publicly held debt accounting for about 100% of GDP (compiled figures; to be verified).
Money is moving into hard assets, asking the same question: who ultimately bears the cost of debt?
The Southern Hemisphere offered an answer, too. On November 3, the Reserve Bank of Australia raised interest rates by 25 basis points to 4.85%, an 18-year high, in a 6–3 vote. Not every central bank is in a rate-cutting cycle.
Ballots determine the political landscape; interest rates determine asset prices. Understand the former, but keep an even closer eye on the latter.
The above is for sharing information and views only and does not constitute investment advice.
With votes still uncounted, markets sway,
Two tides of gains and losses through the night.
Prices stay aloft; payrolls loom near,
Gold and silver ask what dawn may bring.
— Mingdao
The U.S. midterm elections were held on November 4. An X news roundup says Democrats captured both the House and the Senate, creating a divided-government situation with the Trump administration (unverified; official vote counts should be treated as authoritative). Nasdaq futures fell nearly 1% at one point overnight, while the Dow rose more than 1,000 points after the market opened (unverified).
The same result sent markets in two different directions within a few hours.
What determines the direction isn’t who wins, but what will—and won’t—change after the win. Divided government makes major legislation harder to pass, shifting policy from “acceleration” to “gridlock.” For markets, a predictable stalemate can sometimes be easier to price than uncertain reforms.
But that’s an inference, not a conclusion.
Now consider the data. The October ISM Services PMI came in at 54.5, below the previous reading of 54.9 and expectations of 54.8, but still in expansionary territory above 50; the prices component was 73.0. ADP reported 86,000 new private-sector jobs in October, above expectations.
Expansion is continuing, and so is price pressure.
That’s the more important variable beyond the election. The services prices component remains high, indicating that inflation hasn’t run its course. Friday’s official nonfarm payrolls report will have a more direct impact on the interest-rate outlook than any ballot.
Meanwhile, after the election, gold rose above around $4,030 per ounce and silver to around $52, while the dollar weakened and Treasury yields fell (specific yields to be verified). On November 4, the U.S. Treasury bought back $6 billion in Treasury securities with maturities of 10 to 20 years, receiving bids of more than $39 billion; total U.S. debt stood at around $40.5 trillion, with publicly held debt accounting for about 100% of GDP (compiled figures; to be verified).
Money is moving into hard assets, asking the same question: who ultimately bears the cost of debt?
The Southern Hemisphere offered an answer, too. On November 3, the Reserve Bank of Australia raised interest rates by 25 basis points to 4.85%, an 18-year high, in a 6–3 vote. Not every central bank is in a rate-cutting cycle.
Ballots determine the political landscape; interest rates determine asset prices. Understand the former, but keep an even closer eye on the latter.
The above is for sharing information and views only and does not constitute investment advice.
With votes still uncounted, markets sway,
Two tides of gains and losses through the night.
Prices stay aloft; payrolls loom near,
Gold and silver ask what dawn may bring.
— Mingdao