Last Day for Voting in the 2024 U.S. Election – Currency Thoughts
Last Day for Voting in the 2024 U.S. Election
November 5, 2024
In these polarized times, one area of wide agreement surrounding today’s U.S. election is that the stakes riding on the outcome are enormously high. Voters have been prepped not to be surprised if the winners of the presidential race and several congressional contests remained undecided at the end of this day, if not for several days. Opinion polls throughout the long campaign have painted a very close race.
The most important issue cited in polls by voters has been the economy, with many expressing disappointment that doesn’t quite square with actual data. 16.6 million more non-farm payroll jobs were reported last Friday for October 2024 than were reported on November 6, 2020 for October 2020. The jobless rate is 4.1% now, down from 6.8% then, and real GDP has expanded at a sollid 3.3% annualized rate over the past sixteen quarters. The Nasdaq, S&P 500, and Dow Jones Industrials Index have soared 80.4%, 70.7% and 52.2% since Election Day four years ago, and the dollar has strengthened 46% against the yen and 7.3% versus the euro between then and now. Drilling deeper into voter complaints about the U.S. economy, the culprit is inflation, that is the rate of change a representative basket of all prices. The unwinding of Covid restrictions unleashed pent-up demand and led to major supply chain bottlenecks that sent inflation soaring virtually everywhere around the world, including in the United States. U.S. CPI inflation now of 2.4% is actually closer to the 2.0% sweet spot than the 1.4% reading in October 2020.
People are waiting anxiously for clarification on who will be in charge of the U.S. federal government after next January 20th. In several respects, people with a big financial stake in the game seem to be betting on a Trump victory. The price of Bitcoin rose another 1.4% overnight, and the dollar slipped 0.6% against the Australian dollar, 0.4% relative to the kiwi, and 0.2% versus the euro, Swissy, sterling and Canadian dollar. An exception has been the Mexican peso that lost another 0.2% and the yuan that dipped 0.1%. The 10-year U.S. Treasury yield is four basis points higher. Each of these movements is consistent with the direction one would expect from Trump’s emphasis on protectionism especially directed against China and Mexico, his desire for a weaker and therefore more price competitive dollar, and fiscal proposals that will balloon the deficit.
In equity markets overnight, share prices advanced 2.3% in China and 2.1% in Hong Kong, reflecting optimism inspired by Premier Li’s projection of in-target Chinese growth and a pledge to open fiscal spigots amply. The Japanese Nikkei and Indian Sensex posted gains of 1.1% and 0.9%, but listless European markets reflected high anxiety over Trump’s aversion to NATO and admiration for Russian President Putin. U.S. stocks opened mixed, and and the price of West Texas Intermediate oil is 0.8% firmer.
U.S. financial markets reflect a cautious 25-basis point cut of the federal funds target later this week after the FOMC meets Wednesday and Thursday.
While many major monetary policy authorities are now shifting gears, but one that has not yet done so is the Reserve Bank of Australia, which again held its ground and kept the Official Cash Rate unchanged at the peak level of 4.35% that represents more than a decade high and was first reached a year ago after increases totaling 300 basis points in 2022 and 125 bps in 2023. Governor Bullock’s post-decision press conference reiterated that a rate cut had not even been discussed and policy restraint will be required for some time longer. Key points made in the RBA’s released statement today are
- While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high.
- It will be some time yet before inflation is sustainably in the target range and approaching the midpoint.
- Geopolitical uncertainties remain pronounced.
Among price data reported today, the U.S. goods and services trade deficit widened sharply in September to a 29-month high of $84.359 billion compared to $70.8 billion a month earlier and $62.2 billion in Sept 2023.
Canada’s trade balance in September was in deficit (C$ 1.26 billion) for a seventh straight month.
The Institute of Supply Management’s services purchasing managers index improved to a much larger-than-expected degree, printing at a 26-month high of 56.0, yet the price component eased a tad. The S&P Global composite and service sector PMI readings of 54.1 and 55.0 were at 3- and 2-month highs.
Year-on-year GDP growth in Indonesia slowed last quarter to a one-year low of 4.95%.
French industrial production fell by a larger-than-expected 0.9% in September and was 0.6% below its year-earlier level.
South Korean consumer price inflation slowed to a 45-month low of 1.3% last month, having peaked in mid-2022 at 6.3%. Filipino CPI inflation rose 0.4 percentage points to a 2-month high of 2.3% in October. It was 8.7% in January 2023. Armenian CPI inflation last month matched September’s 4-month low of 0.6%, having crested at 10.3% in mid-2022. Serbian producer price inflation had imploded from 19.8% in July 2022 to a 44-month low of -0.6% in September 2024 but ticked back to 0.5% last month.
Canada’s service sector purchasing managers index jumped four full points from 46.4 in September to 50.4 in October, its best reading since May.
Hong Kong’s private PMI rose 2.2 points in October to a 19-month high of 52.2.
Singapore’s private PMI fell 1.1 points last month to a 4-month low but still conveyed robust activity with a reading of 55.5.
Australia’s composite and service PMI readings each rose in October but conveyed only modest growth with 2-month highs of 50.2 and 51.0.
China’s October composite and service sector PMI readings (51.9 and 52.6) conveyed the best growth in four and three months, respectively.
Non-oil PMI scores in the U.A.E. of 54.1 and in Egypt of 49.0 represent 2-month highs, while the Saudi Arabian survey score of 56.9 was the best in six months.
South Africa’s PMI dipped to a 2-month low of 50.6, and Lebanon’s reading of 45.0, a 44-month low and two full points worse than in September, reflects its latest war with Israel.
The Swedish composite and service sector PMI readings of 53.0 and 52.9 show the fastest positive growth in 7 and 3 months.
Ireland’s PMI scores of 52.6 overall and 53.8 in the service sector also exceeded the 50 barrier between improvement and deterioration. While the composite score was a 2-month high, the service sector reading was a 2-month low.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: purchasing manager survey results, Reserve Bank of Australia, U.S. economy cited as major election issue
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