All Eyes on the U.S. Election

Election day produces a volatile rates session. Swap rates rose ~3 bps overnight and climbed another ~5 bps to intraday highs after the release of strong US services sector data. Rates then reversed course as markets shifted attention back to the presidential election. Rates fell 6-9 bps throughout the afternoon and closed nearly unchanged. Meanwhile, the S&P 500, NASDAQ, and DJIA rallied over 1% today.

US services sector expands at fastest pace since 2022. The ISM services index climbed to 56.0 in October from 54.9 in September, well above the 53.8 median forecast. That marked the highest level since July 2022 and a significant climb from June’s 48.8, the largest service sector contraction since May 2020. October’s climb was buoyed by a rebound in employment (53.0 from 48.1 in September) and a decline in prices (58.1 from 59.4 in September).

Head of China’s central bank pledges support for economic growth. Following a wave of recently implemented stimulus measures aimed at recharging China’s lagging economy, People’s Bank of China Governor Pan Gongsheng addressed Chinese lawmakers today and suggested that keeping an accommodative monetary policy stance will help spur economic growth. The comments were made during a meeting of the National’s People’s Congress that is being closely watched for more signs of government stimulus. Key officials such as Chinese Premier Li Qiang, who spoke earlier today, feel confident in China’s ability to reach its 5% 2024 growth target.