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This week kicked off with mixed China inflation prints. Later today we will hear from the Fed’s Bowman, Goolsbee and Barkin, and the BoE’s Bailey. China trade data and US CPI will garner market focus on Tuesday. Current estimates are for an easing in inflationary pressures, the year-on-year figure will not be released given the government shutdown in October 2025. Central bank chatter includes the BoE’s Lombardelli, ECB’s Lane and Fed’s Williams at the Bank of England and Its Watchers event. US markets are shut on Wednesday for Veterans Day. ECB speakers include President Lagarde, and Cipollone. UK GDP and industrial production and the US initial jobless claims prints are due on Thursday. The ECB’s Vijcic speaks at an IMF event on “Choosing Growth”, and we will hear from the Fed’s Schmid, Daly and Hammack amongst others. Eurozone GDP, US PPI and further central banks rhetoric will be the key events on Friday.
Global markets were driven by three main developments last week: the US midterm election result, a sharp reversal in oil prices amid hopes of de-escalation in the US-Iran conflict, and concerns about the outlook for AI-related investment. Markets were volatile, with an initial relief rally following the unexpected “Blue Tsunami” midterm victory giving way to renewed selling in technology stocks. Concerns that a Democrat-controlled Congress could impose tighter restrictions on data-centre development and AI infrastructure investment weighed heavily on sentiment, particularly across semiconductor and large-cap technology shares. The S&P 500 fell 2.7% over the week, marking its fourth consecutive weekly decline.
US Treasuries benefited from safe-haven demand during the technology sell-off and the sharp decline in oil prices, with lower energy prices easing some inflation concerns. The US 10-year Treasury yield ended the week, 7bps lower at 4.86%. The dollar was initially weaker as falling oil prices and changing expectations around the geopolitical outlook influenced currency markets. However, it recovered towards the end of the week following the employment report up 0.41%. Brent crude was one of the week’s biggest movers, falling approximately 13% to $98.32pb, having traded close to $113 the previous week. The decline reflected expectations that the election result could make the US administration more inclined to seek an end to the conflict with Iran, reducing the risk of further disruption to Middle Eastern energy supplies.
In the US, the main economic release was October’s employment report, which surprised to the upside. Non-farm payrolls increased by 165k, against consensus expectations of around 65k, while September’s figure was revised upwards to 60k from 29k. Unemployment also fell from 4.2% to 4.1%. The report suggested that the labour market remained more resilient than anticipated. Average hourly earnings increased by 3.1%yoy, although underlying affordability pressures remained a concern. Earlier in the week, the ISM services index came in at 54.8, indicating continued expansion in the services sector, while the prices-paid component increased to 74.6, highlighting persistent input cost pressures.