Countdown to Chaos? U.S. Election Set to Rock Markets

Tuesday, 5 November 2024, 05.30 – RBA Interest Rate Decision (Nov)

The latest update from the Reserve Bank of Australia (RBA) shows that rates were held steady at 4.35% for the seventh meeting in a row in September, reflecting its cautious approach amid mixed economic signals. Under the leadership of Governor Michele Bullock, the RBA is focused on bringing inflation back within the target range of 2-3%, while also considering the financial strain on households affected by prolonged high rates. Unlike countries such as the U.S., which have experienced sharper drops in inflation and more aggressive rate hikes, the RBA believes Australia’s distinct economic factors—like stable unemployment and inflation—justify a more gradual easing strategy. As a result, the RBA is expected to keep the cash rate steady at 4.35% in its next meeting.

Tuesday, 5 November 2024, 12:00 – U.S. Presidential Election

Every four years, U.S. citizens head to the polls to select a group of electors for the U.S. Electoral College, who are ultimately responsible for electing the President and Vice President. This election is a critical focal point for financial markets, as its outcome will likely impact the Federal Reserve’s upcoming decisions. At present, Vice President Kamala Harris holds a narrow lead over former President Donald Trump. However, with polls showing a highly competitive race, substantial uncertainty looms as Election Day approaches. This heightened uncertainty is expected to fuel significant volatility in the financial markets, as investors weigh the potential policy shifts under the next administration.

Thursday, 7 November 2024, 05:00 – BoE Interest Rate Decision (Nov)

In its September meeting, Bank of England (BoE) interest rate decision held rates at 5. This decision was largely influenced by decreasing inflation pressures, with inflation easing to around the BoE’s target level of 2% at that period, alongside concerns of a potential economic slowdown. Additionally, Governor Andrew Bailey emphasized a cautious approach, aiming to balance easing inflation against the risk of rapid rate cuts that could destabilize financial markets or reverse progress on price stability. However, market anticipated that BoE may implement another rate cut as British inflation now plunged to a three-year low of 1.7% in September from 2.2%, below the BoE’s 2% target. That leaves room for the Monetary Policy Committee (MPC) to cut rates next week after pausing in September following a narrow vote to start easing in August.

Thursday, 7 November 2024, 05:00 – Fed Interest Rate Decision

The Federal Reserve cut its interest rate by 50 basis points to a range of 4.75%-5.0% on its previous meeting, marking its first rate cut in four years. This move reflects the Fed’s recognition of easing inflation pressures, with core inflation projected to taper toward 2% by 2026. The decision signals the end of the “higher-for-longer” rate approach and suggests the start of a potential easing cycle as the Fed shifts focus from controlling inflation to supporting economic stability. In the upcoming November meeting, analysts expect a further rate cut as the Fed maintains its dovish stance to address slowing inflation and potential economic risks. According to CME FedWatch Tool, the market are pricing in a 98.9% probability of a 25 basis point rate cut.