Aurelia Butler

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Who will be at the helm of the world’s biggest economy will have wide-ranging consequences for financial markets, global trade, with China and Europe in focus, and monetary policy, with interest-rate setting meetings at the Fed, as well as in Britain, Australia and Brazil scheduled for the coming week. Here’s all you need to know about the week ahead from Lewis Krauskopf, Ira Iosebashvili and Rodrigo Campos in New York, Rae Wee in Singapore and Amanda Cooper in London.1/TO THE BALLOT BOXESThe U.S. election cycle that has already rattled asset prices finally comes to a head.Recent gains in Treasury yields and the dollar are seen by some traders as the market anticipating a win for Trump. But polls suggest a very close race with Harris, meaning that a victory by the Democrat could spark a rash of trading unwinds.Investors may just be rooting for a clear result, fearing a potentially contested election and lengthy period of uncertainty about the government makeup as a significant risk to markets.Meanwhile, bitcoin – the ultimate Trump trade – is nearing an all-time high again. 2/THE DAY AFTERThe day after the U.S. election, the Fed kicks off its meeting on interest rates. The elephant in the monetary policy room is how the decisions by the next U.S. president will impact growth and inflation dynamics. For now, recent data shows a stronger-than-expected U.S. economy has led some investors to question whether the Fed miscalculated when it kicked off the current easing cycle with a jumbo-sized 50-basis point rate cut in September. A more modest 25-basis point reduction is expected on Thursday. Investors hope the Fed’s statement and Chairman Jerome Powell’s news conference will show whether policy makers believe economic resilience will continue – and if they might cut rates less than expected as a consequence. Futures linked to the Fed’s policy rate showed investors pricing in about 120 basis points of cuts by year-end.3/US BULL IN A CHINA SHOP? China announces October trade figures on Thursday – some fear this might be one of the last times investors can expect upbeat export numbers, depending on who takes the White House.Trump’s threat of 60% tariffs on China has rattled the country’s industrial complex, which sells goods worth more than $400 billion annually to the United States. With export momentum having been the lone bright spot for China’s struggling economy, a Trump victory is likely to have huge ramifications.October inflation data due on Nov. 9 – the first full-month reading since Chinese authorities unveiled the September raft of stimulus measures to pull the economy out of its deflationary funk. That could provide an early read of how domestic consumers have taken to Beijing’s urgent push to support growth. 4/ FOLLOW THE LEADER, OR NOTWhere the Fed goes, other central banks often follow. But the outcome of the U.S. election could skew this dynamic.A Trump victory – and potential tit-for-tat trade war – would weigh on export-reliant economies. The resulting rise in U.S. inflation and a stronger dollar might force the Fed to cut rates more slowly, while other central banks are left to grapple with a hit to growth from those extra duties.For now, it’s business as usual. The Bank of England is expected to cut rates by 25 bps on Thursday. Possible inflationary effects of the Labour government’s new budget might mean fewer cuts in 2025, no matter what happens in the U.S.Down under, sticky inflation means there is virtually no chance of a cut from the Reserve Bank of Australia on Tuesday until next year. 5/ WOBBLY EMERGING GIANTS Mexico, jointly with China, is a weather vane for U.S.-emerging market relations and has seen the peso touch a two-year low, with concerns over the election amplifying domestic woes.Emerging market outflows have, by some measures, scaled two-year highs, fuelled by a mix of a strong dollar, high U.S. yields and a general de-risking desire. That will raise pressure on emerging market central banks near and far. Brazil’s central bank, which has been front-running the Fed, has already returned to a hiking cycle. Policy makers are expected to lift interest rates by 50 bps on Wednesday, following a 25 bps increase in September to 10.75%. Economists now see inflation ending the year slightly above the 4.5% upper end of the official target range. Policy makers in emerging Europe might be in line for more pressure as well. Poland’s central bank, which has held rates for a just over a year now, releases its decision on Wednesday and the Czech Republic is expected to deliver another rate cut on Thursday. (Graphics by Kripa Jayaram, Pasit Kongkunakornkul, Prinz Magtulis and Sumanta Sen; Compiled by Karin Strohecker; Editing by Kirsten Donovan) More

BRASILIA (Reuters) – The Brazilian foreign ministry said in a statement on Friday it was taken by surprise by an “offensive tone” that Venezuelan authorities used against Brazil, the latest development of a diplomatic row between the two leftist-led countries. In the statement, Brazil’s foreign ministry said the choice for “personal attacks and rhetorical escalations” does not match the respectful way its government treats Venezuela and its people.Earlier this week, the Venezuelan government recalled its ambassador in Brazil over what it described as “repeated interventionist and rude statements” from Brasilia, while also criticizing Brazilian President Luiz Inacio Lula da Silva’s top foreign policy advisor Celso Amorim.The diplomatic escalation comes after months of tension following Venezuela’s disputed presidential election in late July. Brazil has not recognized claims of victory by either Venezuelan President Nicoals Maduro or his opposition. Relations further soured earlier this month when Brazil vetoed Venezuela’s admission into the BRICS group of emerging economies, which Venezuela has branded as an “inexplicable and immoral aggression.”On Thursday, Venezuela’s national police posted on its official Instagram account a photo of Lula’s silhouette, with Brazil’s national flag behind him, and the sentence: “Whoever messes with Venezuela will pay for it.” More

(Reuters) – A U.S. judge on Friday denied Elon Musk’s bid to move a Pennsylvania lawsuit over his $1 million voter prizes to federal court, moving the case back to state court.It was not immediately clear if the decision would affect the billionaire’s plan to keep awarding money until the U.S. presidential election on Tuesday. The decision was issued by U.S. District Judge Gerald Pappert in Philadelphia federal court.Musk has been giving $1 million checks to randomly selected registered voters who sign a petition supporting free speech and gun rights.Musk’s America PAC had awarded $1 million prizes to 14 people as of Friday and said the final prize will be given on Tuesday. Democratic Philadelphia District Attorney Lawrence Krasner sued Musk and his political action committee, which backs Republican former President Donald Trump, on Oct. 28 in a state court to try to block the giveaway. Krasner called the program an illegal lottery. Two days later, Tesla (NASDAQ:TSLA) CEO Musk and his America PAC sought to move it to federal court, arguing Krasner’s lawsuit raised questions about free-speech rights and election interference that belong in federal court. That prompted the state judge who had been overseeing the case to put it on hold. In arguing that the case belonged in state court, Krasner called Musk’s maneuver an attempt to “run the clock until Election Day.” Krasner did not allege the giveaway violates federal law.Philadelphia is the largest city in Pennsylvania, one of seven battleground states likely to determine the outcome of the race between Trump and his Democratic opponent, Vice President Kamala Harris. Musk’s offer is limited to registered voters in the seven states expected to decide the election – Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin.Musk gave away the first $1 million at an Oct. 19 America PAC rally in Harrisburg, Pennsylvania’s state capital.The giveaway falls in a gray area of election law, and legal experts are divided on whether Musk could be violating federal laws against paying people to register to vote.The U.S. Department of Justice warned America PAC the giveaway could violate federal law, according to media reports, but federal prosecutors have not taken any public action.Musk has so far given nearly $120 million to America PAC, according to federal disclosures. More

The strength of economic data in recent months had “pushed the market to start pricing in an increased probability of a pause at one of the next two meetings. However, this should give the Fed enough room to continue with the path they laid out in the last SEP,” Jefferies said in a note, backing the Fed to cut rates by 25 basis points in November and December.The U.S. economy added just 12,000 jobs in October, falling well short of economists’ expectations for 100,000 job gains. The unemployment rate held steady at 4.1%.The weaker-than-expected jobs report was heavily distorted by the impact of hurricanes Helene and Milton, as well as the strike at Boeing (NYSE:BA), which sidelined about 33,000 workers, according to William Blair.”This was a very messy employment report for October,” William Blair said. “The underlying data was heavily distorted by the impact from hurricanes Helene and Milton, along with the strike at Boeing, which has sidelined about 33,000 workers (with another 10,000 also on strike at other companies).”While weather related disruptions were the main drag on payrolls during October, the underlying trend of labor market growth shows a trend that deccelerating.  “Attempting to cut through this trend by looking across a swath of data shows a labor market where growth is decelerating, where there are fewer job openings, where companies are facing increased pressure on margins from declining pricing power and rising interest costs, and where hours worked are tangibly slowing,” William Blair added.Looking deeper into the details of the employment rate, temp staffing volume, adjusted for seasonality, fell 7.0% year-on-year and the temp penetration rate was 1.64%, down 3 basis points month on month and off from March 2022’s 2.1% all-time peak. This dip, BMO said, is noteworthy  because historically, once “this metric falls below 1.85% the U.S. has been in a recession.”BMO cautioned, however, that this “monthly data series is notorious for revisions.”The weaker jobs report is expected to support the case for further monetary policy easing. “A further rate cut of 25 basis points looks the most likely outcome—a conclusion this report will only help support,” William Blair said.Goldman Sachs agrees, forecasting the FOMC to lower the fed funds rate by 25bp at the November and December meetings. More