To the Newcomers of the New World ~ “Ballots and the Market Tape”
On November 4, X news roundups said the Democrats had won both chambers of Congress, creating a divided government with the Trump administration (unverified; official vote counts should be treated as definitive). Nasdaq futures briefly fell nearly 1% overnight, while the Dow rose more than 1,000 points after the market opened (unverified).
The same result sent the market in two different directions within a few hours.
What determines the direction is not who wins, but what will—and will not—change after the win. A 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 is 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 expansion territory above 50; its 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 is the more important variable beyond the election. The services prices component remains elevated, suggesting inflation has not run its course. Friday’s official nonfarm payrolls report will affect the interest-rate outlook more directly than any ballot.
Meanwhile, after the election, gold climbed above about $4,030 per ounce and silver reached around $52; the dollar weakened and Treasury yields fell (specific yields unverified). On November 4, the U.S. Treasury repurchased $6 billion of 10- to 20-year Treasury securities, receiving more than $39 billion in offers. Total U.S. debt stands at about $40.5 trillion, with publicly held debt amounting to roughly 100% of GDP (compiled figures; unverified).
Money is flowing 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 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.
Before the count is settled, markets start to sway;
Overnight, two tides of gains and losses surge and ebb.
Prices stay high, payrolls loom near;
Gold and silver ask, in silence, what tomorrow will bring.
— Mingdao
On November 4, X news roundups said the Democrats had won both chambers of Congress, creating a divided government with the Trump administration (unverified; official vote counts should be treated as definitive). Nasdaq futures briefly fell nearly 1% overnight, while the Dow rose more than 1,000 points after the market opened (unverified).
The same result sent the market in two different directions within a few hours.
What determines the direction is not who wins, but what will—and will not—change after the win. A 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 is 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 expansion territory above 50; its 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 is the more important variable beyond the election. The services prices component remains elevated, suggesting inflation has not run its course. Friday’s official nonfarm payrolls report will affect the interest-rate outlook more directly than any ballot.
Meanwhile, after the election, gold climbed above about $4,030 per ounce and silver reached around $52; the dollar weakened and Treasury yields fell (specific yields unverified). On November 4, the U.S. Treasury repurchased $6 billion of 10- to 20-year Treasury securities, receiving more than $39 billion in offers. Total U.S. debt stands at about $40.5 trillion, with publicly held debt amounting to roughly 100% of GDP (compiled figures; unverified).
Money is flowing 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 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.
Before the count is settled, markets start to sway;
Overnight, two tides of gains and losses surge and ebb.
Prices stay high, payrolls loom near;
Gold and silver ask, in silence, what tomorrow will bring.
— Mingdao