The US presidential election polls continue to dominate discussions in the market, causing some volatility in trading sessions. Last week, Trump’s lead in prediction models was diminished by swing-state polls, resulting in both candidates being tied at 50%. Recently, an Iowa survey showed Harris leading in a state that Trump had won in the past two elections, which was unexpected compared to other polls in Iowa. This market uncertainty is to be expected as we approach what could potentially be the closest US presidential election since 2000.
In the Asian trading session, US yields experienced a decrease of 7 bps (2-yr) to 11 bps (10-yr), while German yields had changes ranging from +3 bps (2-yr) to -3 bps (30-yr). Money markets in the European Monetary Union (EMU) have been adjusting their rate cut bets for December following recent data on Q3 GDP and October CPI. The dollar also faced a setback, with the trade-weighted greenback trading at around 103.75, lower than Friday’s close at 104.35. Other currency pairs like EUR/USD and USD/JPY also saw fluctuations, reflecting the market’s uncertainty.
In Belgium, OLO’s slightly outperformed French OAT’s, despite political developments. NVA De Wever’s resignation in the deadlocked federal government coalition talks has caused uncertainty, as parties are struggling to form a new government. The King has not yet accepted De Wever’s resignation, giving him an additional week to find a solution. The possibility of forming a centre-right government aiming to tighten fiscal policy has led to discussions among party leaders. The situation remains fragile, with little appetite for a fresh ballot.
On the international front, Turkish inflation in October eased slightly compared to September, with core inflation close to expectations. The Central Bank of the Republic of Turkey (CBRT) kept its policy rate unchanged at 50% in September but is expected to present a new quarterly inflation report soon. German companies are also becoming more cautious in their employment plans, with the IFO employment barometer showing a decline in October.
Overall, market conditions remain uncertain due to political and economic factors both domestically and internationally. Investors are advised to stay informed and cautious in their decision-making process.
