Spreadex | Oct 23, 2020 12:25
What will the final week of October, and the final week before the US election, bring for the global markets?
With both debates over and done with, Joe Biden remains the favourite, at a fixed odds price of 4/11, an Electoral College Votes spread of 310-318 and a Total States Won spread of 25.25-26.75.
In comparison, Trump is at 9/5, 220-228 and 24.25-25.75 respectively.
However, Biden has seen a tightening in the last week or so – if not in the polls then certainly in SpreadEX’s prices, with the Democrat falling from a peak Electoral College Votes spread of 321-329.
Like a lumbering movie monster, Trump won’t stay down – but can he pull off another shock victory?
If he can, the market’s biggest questions will be over a covid-19 stimulus package. At the time of writing, House Speaker Nancy Pelosi has signalled that she and Treasury Secretary Steven Mnuchin are ‘just about there’ on the details of a relief plan, which reportedly runs to $1.9 trillion.
However, it needs to get past the Republican-controlled Senate, and with a fiercely opposed Mitch McConnell in charge a pre-election sign-off is unlikely. That would push the issue into the murky waters of the ‘lame-duck’ period ahead of January’s inauguration, with the Republicans either seeking to celebrate Trump’s 2nd term, or create the most difficult inheritance possible for a newly-elected Biden.
Moving onto the economic calendar, the biggest number of the week arrives on Thursday, as the US posts its third quarter GDP figure. The second quarter was the thing of nightmares, with the economy contracting by 32.9% at the annualised rate. This time analysts are expecting almost exactly the opposite number, with forecasts suggesting growth of 30%-plus. Talking of the election, it’ll to see if the Q3 growth figure does anything for Trump’s polling and prices.
Elsewhere, there’s new home sales on Monday, durable goods orders and CB consumer confidence on Tuesday, the goods trade balance on Wednesday, jobless claims on Thursday and the core PCE price index, Chicago PMI and revised consumer sentiment numbers on Friday.
It’s also a pretty colossal week for US earnings. The highlights are Microsoft (NASDAQ:MSFT) on Tuesday, and Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Google-parent Alphabet (NASDAQ:GOOGL) on Thursday.
Now that Brexit talks are back on, aiming for a deal in mid-November, the pound – and by relation the FTSE – is going to continue to be sensitive to updates on the progress of negotiations, and the ever-shifting likelihood of an agreement being reached.
As for the UK economic calendar, the country isn’t joining in with the Q3 GDP bonanza just yet. That leaves its data-week looking pretty sparse, with the CBI realised sales reading on Tuesday, mortgage approvals and net lending to individuals on Thursday, and not much else.
The lack of truly worthwhile data means the FTSE and pound may be at the mercy of wider market movements, especially related to covid-19 restrictions.
Before that you have the German Ifo business climate figure on Monday, the Spanish unemployment rate on Tuesday, and the latest ECB meeting and press conference on Thursday, joined by the Spanish and German inflation numbers.
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