Daily Market Color

Equities Rise Ahead of US Presidential Election

Rates and stocks kick off election week on a volatile note
Swap rates and Treasury yields are 3-5 basis points lower across the curve this morning as we begin an extremely eventful week for markets. Tuesday’s election is undoubtedly the highlight, followed by Wednesday’s FOMC meeting and press conference. Nonfarm payrolls will round out the week on Friday. US equities are also bouncing back following their worst week since the original COVID-19 driven sell-off in March. The S&P 500 and DJIA are up 1.12% and 1.20% respectively to start the day.
COVID-19 Update
In an attempt to control their rising virus cases, England has joined a host of other European countries in announcing a month-long complete lockdown starting this Thursday.  Europe has recently overtaken the US in both virus deaths and infections, reaching a total of more than 10.1 million on Sunday.  US cases are also growing rapidly with 99,321 cases reported on Friday, a new record.  Scientists are warning that the virus is expected to continue spreading rapidly throughout the winter, with Dr. Anthony Fauci commenting that the US “could not possibly be positioned more poorly.”
Week ahead
Later this morning, a few manufacturing figures will be published, including the PMI and ISM manufacturing levels.  Both figures are expected to reflect expanding manufacturing activity in the US after the industry was hit hard in March.  The US presidential election will come to an end on Tuesday.  On Wednesday, international trade numbers will be released, with economists expecting the trade deficit to shrink for September due to a drop in demand for imports.  The Fed will end their two-day rate setting meeting on Thursday, followed by the FOMC announcement.  The Fed is expected to leave rates at their current low levels.  The October jobs report will be out on Friday, and economists forecast the unemployment rate will drop to 7.7% from 7.9% last month.

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