Market movers today
Besides digesting the US election results, we get PMI services indices across the world including the first release in Sweden, Italy, Spain as well as ISM non-manufacturing in the US.
In the US, we also get the ADP jobs report for October, which, however, is not considered a good indicator for the official jobs report due out on Friday.
On the US election, please note we are hosting two conference calls this morning (09:00 CET in English and 10:00 CET in Danish) discussing what we know so far, the market reaction overnight and what to expect going forward depending on the final result. The English invitation can be found here and the Danish invitation can be found here.
The 60 second overview
US election: At the time of writing, the US election result is too close to call as key swing states, in particular Pennsylvania, have yet to announce results. As expected, the Democratic Party has retained the House, but the outcome of the Presidential election and the Senate election is still up in the air. The chance of a Democratic sweep has gone down as results have ticked in, while the possibility of Donald Trump remaining President and a divided Congress has gone up. It might be all the way until Friday, before a final result is ready.
Oil: Brent rebounded back above USD40/bbl yesterday as the market has started to price a delay of planned OPEC+ production hikes. That would keep a tighter oil market balance amid a drop in demand following new covid-19 related lockdowns in Europe.
Equities: US and European equity futures are up on the higher possibility that Donald Trump will remain President and Congress will stay divided. That would be a more positive outcome for equity markets than a Democratic sweep in our view.
FI: The reaction in the FI market has been lower US yields and a positive response in the US equity market where especially Nasdaq has performed. 10Y Treasury yields declined some 9bp this morning. We expect that US yields will remain range bound before we know the election result and the spill-over effect to European yields will be modestly positive.
FX: The main story in FX markets this morning is a modest broad strengthening of the USD while other safe havens have also benefitted on heightened uncertainty/Republican performance in the US election. RUB is the clear winner at the time of writing. Scandies are caught between opposing forces but a stronger USD, higher uncertainty and lower global yields have sent NOK and SEK modestly weaker vs EUR.
Credit: Credit markets took another leg tighter yesterday where iTraxx Xover tightened 6bp, closing in 349 and Main went 1.5bp tighter to 61bp. Cash bonds also did well and HY/IG tightened 10bp and 2bp, respectively.
Nordic macro and markets
In Norway, we initially thought that parts of the housing market strength in September was due to the upcoming tightening of the mortgage regulations, and hence expected a minor correction in October. However, the monthly OBOS-figures published on Monday points to a monthly gain around 0.5 %.