Market movers today

Today, US voters are voting in the midterms and the results are expected in the early hours of Wednesday morning (CET). Opinion polls suggest a divided Congress with the Democrats controlling the House of Representatives and the Republicans the Senate. We think the economic and market implications are limited, as economic policy is expected to remain unchanged after the election.

In the UK, Prime Minister Theresa May’s Brexit Cabinet is scheduled to meet and discuss the recent developments in Brexit negotiations.

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In terms of economic data releases, we will mainly get tier-2 data releases today.

Norges Bank Governor Øystein Olsen is due to speak today.

Selected market news

Trading is quite mixed this morning with the regional equity indices in Asia showing either minor gains or losses. Yields on 10-year US treasuries and the US dollar are steady as investors await the outcome of the US midterm elections.

There was little support for the Italian budget at yesterday’s Eurogroup meeting. The finance ministers backed the EU commission’s stance on the Italian budget for 2019 and that Italy must change their budget for 2019. The head of the Eurogroup, the Portuguese Finance Minister Centeneo stated that he hoped that Italy would revise their budget. The recent comments from the Italian government has been 1diverse . On one hand the Finance Minister Tria has stated they are looking at revising the budget, while the head of the 5SM – De Maio has stated they will not change the budget. The revised budget has to be send to Brussels no later than Tuesday next week (November 13) and the Eurogroup has called for an extraordinary meeting on November 19. However, despite the risk of a renewed confrontation between the EU commission and the Italian government, the market has remained fairly calm. We attribute this to the rating agencies and their comments on Italy.

In Sweden, the Moderate leader Ulf Kristersson stated yesterday at a press conference that he is trying to form a four-party coalition government and there will be a vote in parliament for a government next week. However, it is not certain whether he will be voted in as the next Swedish PM. Four rejections will trigger a snap election. Hence, either we will have a Kristersson-led government in place by the end of next week or we are one step closer to an extra election. The latter scenario could open for a messy December for the SEK.

The Reserve Bank of Australia kept the official interest rate unchanged this morning. It was the 25 th consecutive meeting with no changes to the policy rate and it was widely expected in the market and no reaction in the Australian dollar.

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