For professional clients only. The information contained within this post is not intended for retail clients.
2 November 2026
This week the US midterm elections, employment data, corporate earnings and central bank commentary will keep markets busy. Today we have global PMI releases and US ISM manufacturing data. Apple and Palantir’s earnings reports will be watched closely, as will comments from the Fed’s Goolsbee and the ECB’s Vujčić, Makhlouf, Escrivá and Moulin. On Tuesday, we have US factory orders, durable goods and JOLTS job openings data. The US midterm elections will also be in focus, as will further ECB commentary.
Global services PMIs, US trade data and the ADP employment change follow on Wednesday, when the US Treasury will announce its quarterly refunding plans. Eurozone PPI, German factory orders and US initial jobless claims are due on Thursday. The BoE is expected to raise interest rates by 25bps, followed by Governor Bailey’s press conference. We will also hear from the Fed’s Barkin and Logan, and the ECB’s President Lagarde and Cipollone. On Friday, attention turns to eurozone retail sales, the US employment report and University of Michigan consumer sentiment. The ECB’s Lane and the Fed’s Williams are also due to speak at the ECB Conference on Money Markets.
Last week markets were driven by a combination of concerns over persistent US inflation, a more hawkish Fed stance, the scale of AI-related corporate investment and geopolitical risks. The S&P 500 fell approximately 0.57% over the week, its third consecutive weekly decline, with losses concentrated towards the end of the week. Technology stocks came under pressure, with disappointing market reactions to earnings and investment plans from major technology companies. Alphabet’s spending plans, Intel’s weaker earnings outlook and concerns around Amazon’s AI investment weighed on sentiment. The Nasdaq underperformed, falling around 2% over the week, reflecting its greater exposure to technology stocks.
A late week flight to quality supported government bonds, with the US 10-year Treasury yield falling 7bps to 4.93%, having started the week around 5.00%. Meanwhile, the US dollar was broadly unchanged, with the DXY marginally higher, gaining approximately 0.1% over the week. Brent crude closed around $117.60 per barrel, up approximately 0.8% over the week, having traded considerably higher earlier in the period. Prices remained supported by geopolitical tensions and concerns over potential disruption to oil shipments through the Middle East, although diplomatic developments helped temper some of the initial supply concerns.
In the US, the FOMC voted to leave interest rates unchanged at 3.75–4.00%. However, the decision was more hawkish than markets had anticipated, with two members dissenting in favour of a 25bp rate increase. The Fed also upgraded its assessment of economic activity from ‘solid’ to ‘strong’, citing resilient growth, robust investment and steady employment. Chair Warsh emphasised that inflation remained elevated and that the Fed needed further evidence before deciding its next move. Markets are currently pricing in a 72% possibility of a hike in December.
US economic data reinforced this more cautious inflation outlook. The preliminary US Q3 GDP estimate showed annualised growth of 3.4%, supported by consumer spending, investment and government expenditure. Meanwhile, September headline PCE inflation increased to 3.6%yoy, while core PCE rose to 3.1%. Consumer spending increased by 0.5% in nominal terms, although real spending was unchanged. Taken together, the figures highlighted the challenge facing the Fed: economic activity remains resilient, while inflation continues to run above its 2% target.
Elsewhere, China’s Fifth Plenum focused on the country’s longer term economic and development priorities, including the transition into the 15th Five-Year Plan period. The leadership reiterated its commitment to high-quality economic growth, innovation, technological development, strengthening domestic demand, deeper reform and opening-up. However, the communiqué offered little in the way of significant new near-term stimulus, with the emphasis remaining on longer-term structural priorities and the implementation of existing policies. The renminbi continued to strengthen, reaching a four-year high against the US dollar.