The world will turn its attention to the US mid-term elections on Tuesday and whether the Democrats can regain control of the House of Representative and put a spanner in President Trump’s domestic and foreign policy agenda.
Central banks in the US, Australia and New Zealand will hold policy meetings with all three expected to keep policy rates on hold. The data calendar is reasonably light although the UK will on Friday release its first estimate of Q3 GDP while New Zealand and Switzerland will publish labour market data.
Monday 5th November
United States: ISM non-manufacturing PMI (October). This index for the important service sector surged to 61.6 in September but is expected to have edged back to 59.3 in October.
Tuesday 6th November
United States: Congressional mid-term elections. Both houses of Congress are currently controlled by President Trump’s Republican Party. All 435 seats in the House of Representatives are up for re-election. Republicans have 240 seats so can’t afford to lose more than 22 seats in order to regain control. History shows that the incumbent party tends to lose seats in mid-term elections but analysts are divided as to whether the Democrats have enough support to boost their seats from currently 195 to 218 or more (the threshold for a majority).
It will in any case be harder for the Democrats to regain control of the Senate. Only 35 out of 100 seats are up for re-election, 26 of which are already held by Democrats. Democrats would have to retain all their Senate seats and pick up two Republican seats in order to swing the majority – a tall order. Historically, mid-term elections have seen a modest voter turnout of around 40% but President Trump’s polarising effect could see a far higher turnout which may in turn swing the end-result.
United Kingdom: BRC retail sales monitor (October). A precursor to the official retail sales data which were weak in September.
Australia: Reserve Bank of Australia policy meeting. The RBA is still caught between a reasonably strong labour market but a vulnerable housing market and is this likely to re-iterate its neutral stance for interest rates.
New Zealand: Labour market data (Q3).
Wednesday 7th November
Eurozone: Retail sales (September)
Thursday 8th November
New Zealand: Reserve Bank of New Zealand policy meeting. The RBNZ has been one of the more dovish major central banks in the past 3-6 months and markets will be looking for signs that the central bank has at least acknowledged the recent pick-up in economic growth and inflation.
Switzerland: Unemployment rate (October).
United States: Federal Reserve policy meeting. The Fed will most likely keep rates on hold and the question is to what extent it bakes in a 25bp rate hike at the December meeting with markets currently pricing in about 20bp of hikes.
Friday 9th November
United Kingdom: GDP (Q3, first estimate). The consensus forecast is that GDP growth accelerated further in Q3 to 0.6% qoq from 0.4% qoq in Q2 and 0.2% qoq in Q1. In normal circumstances this would likely see the Bank of England preparing markets for further rate hikes but the spectre of Brexit has seemingly put any tightening of interest rate policy on hold for at least the next few months.
