The post-Trump rally has returned full force, and US equity futures are sharply higher and well above 6,000 in what should be a light volume day with bonds closed due to the Veteran's Day holiday. As of 8:00am ET, the breakdown is as follow: S&P futures 0.46bps, which hit their 50th all time high for 2024 on Friday; NDX +38bps; RTY +146bps; Crude -222bps; Bitcoin +290bps and at a record over $82,000 with global markets trading broadly higher as they continue to digest US election results + FOMC cut last week. R2K the standout and remains in focus, up over 8.5% last week for its best week since March of 2020. S&P + NDX both closed the week at ATHs. As JPM writes in its market intel note, the Trump Trade has potential to strengthen; TSLA is +7% pre-mkt as small caps outperform by ~1%-pt. The balance of Mag7 are weaker as are Semis, Financials continue to be bid up in what is a new regime. While US bond markets were shut for a holiday (although futures indicate a roughly 5bps rise in yields), the dollar rallied 0.3% against a basket of currencies, adding to a six-week winning streak as both EUR and JPY come from sale. Dollar strength appear to be weighing on commodities as China stimulus once again disappoints and is sold; gold reversed an earlier gain to trade at session lows of $2,660. Meanwhile, Trump and Elon Musk are making demands of the next Senate Republican leader, including allowing the President-elect to make recess appointments without Senate approval. No US data or Fed speakers scheduled for the session.
In premarket trading, the biggest gainer of the day was Tesla which rose as much as 7.3%. Its valuation surpassed $1 trillion on Friday, on a view that a Trump presidency will be a positive for Elon Musk’s company. Crypto-linked stocks also gained in premarket trading as Bitcoin rallied past $82,000 for the first time on the prospect of a Republican-led Congress with pro-crypto lawmakers (Riot Platforms (RIOT US) +14%, MARA Holdings (MARA US) +19%, Bit Digital (BTBT US) +21%, Coinbase (COIN US) +16%, Hut 8 Mining ADRs (HUT US) +12%, MicroStrategy (MSTR US) +11%, Robinhood Markets (HOOD US) +10%). Here are some notable premarket movers:
“Between now and the end of the year, I can easily see how the US market particularly will continue to be strong on hopes that everything Trump has said will come to pass, particularly when it gets confirmed that he got a clean sweep,” said Nick Clay, portfolio manager at Redwheel.
While it feels like the year is largely over and it's all autopilot until 2025, the wait is now on for the next slug of inflation data due Wednesday for clues on the Federal Reserve’s interest-rate trajectory, with annual price growth seen to have quickened slightly to 2.6% in October. Traders will also listen out for Fed policymakers’ speeches after Minneapolis Fed President Neel Kashkari indicated on weekend that rates could ease less than previously expected due to the strong economy (amazing how that happened just days after Trump won).
In Europe,the Estoxx 50 advanced 1.2% on the day, with construction, chemical and industrial shares leading gains. While Trump’s pledge to impose hefty tariffs on trade partners has weighed heavily on European shares, the Stoxx 600 index rebounded after three weeks of declines. The gauge added 0.9%, with all industry groups in the index climbing, as the mood was lifted by a slew of robust company earnings, including German tiremaker Continental AG and insurance firm Hannover Re. Here are the biggest movers Monday:
Earlier, Asian equities fell by the most in a month as Beijing’s latest economic measures disappointed the market, and soft China inflation data signaled that recent efforts to spur economic growth have not been enough. China’s CSI 300 benchmark fell as much as 1.4%, before erasing losses to close with modest gains. Oil pared losses to trade flat after China’s latest efforts disappointed markets. The MSCI Asia Pacific Index fell as much as 1.3% before trimming some losses, with Samsung Electronics among the biggest drags alongside Chinese megacaps Tencent and Meituan. Most key gauges in the region were in the red, with the Hang Seng Index falling 1.5%. South Korea’s Kospi fell more than 1%, while Japanese shares closed little changed. While stocks in Hong Kong slid, those on the mainland recovered a 1.4% drop to close the day higher. The mixed reactions underscore investor confusion over Beijing’s stimulus announcement, which stopped short of providing new plans to rev up its consumption or the property sector. China unveiled a 10 trillion yuan ($1.4 trillion) program Friday to refinance “hidden” local debt. Figures released over the weekend showed anemic consumer inflation in October while producer prices continued falling, indicating government stimulus has been insufficient to pull the economy out of deflation
“The latest debt swap provides temporary relief to local government finances, benefiting sectors like real estate and banking,” said Billy Leung, an investment strategist at Global X ETFs. “However, the swap’s limited scale and lack of consumer-focused stimulus leave broader markets cautious. Note that there are still concerns on tariff pressures and domestic monetary easing efforts which could have execution challenges.”
In FX, the Bloomberg Dollar Spot Index rises 0.4% and remains near best levels of the day into early US session, while the euro fell to its lowest versus the dollar since June 27 amid broad dollar strength with the yen leading losses (EUR/USD dropped 0.3% to 1.0682, down a second day). USD/JPY rallies 0.8% to 153.85 with US Treasury futures under pressure
In rates, treasury futures opened down in Asia and have broadly held losses, leaving the 10-year tenor lower by around 9 ticks on the day. There is no cash Treasuries trading due to a US holiday, but the drop in futures points to a 10-year yield that’s roughly 5 basis points higher than Friday’s closing levels.
US 10-year note futures sit around the 110-00 level, down around 9 ticks on the day. Further out, ultra-long bond futures are down around 12 ticks, implying a bear-steepening move in cash yields. In Europe, Bunds - which are open - advance with German yields richer by as much as 3.5bp across long-end of the curve, with the impact of potential German elections on the country’s debt brake and future issuance unclear. Back in the US, the treasury auction slate resumes Nov. 20 with 20-year bond sale; 2-, 5- and 7-year note auctions are scheduled week commencing Nov. 25.
In commodities, oil prices decline, with WTI falling 1.5% to $69.30 a barrel. Spot gold drops $15 to $2,670/oz. Iron ore declined toward $100 a ton.
Looking at today's calendar, no Fed members scheduled to speak on Monday, and US data slate is empty as it is Veteran's day, and bond markets are closed. This week’s data includes CPI, PPI, Empire manufacturing, retail sales and industrial production.
Market Snapshot
Top Overnight News
A more detailed look at global markets courtesy of Newsquawk
APAC stocks began the week mostly subdued amid China-related headwinds following the recent fiscal stimulus disappointment and softer-than-expected Chinese inflation data from over the weekend. ASX 200 was dragged lower by weakness in the commodity and consumer-related sectors. Nikkei 225 traded indecisively but with the initial downside cushioned alongside currency weakness. Hang Seng and Shanghai Comp were pressured with underperformance in Hong Kong amid losses in property and tech although some chipmakers were boosted after the US ordered TSMC to halt shipments to China of chips used in AI applications. Elsewhere, the mainland traded cautiously after last Friday's announcement of fiscal measures disappointed those hoping for a more forceful stimulus in the aftermath of the Trump election victory, while Chinese CPI and PPI data were softer-than-expected and showed a worsening of the factory-gate deflation
Top Asian News
European bourses, Stoxx 600 (+1%) opened on a strong footing and continued to climb higher into the morning; some of the upside has since subsided, with indices now traversing best levels. European sectors hold a strong positive bias, with only Basic Resources sitting ever-so-slightly in negative territory. The sector is weighed on by slight losses in metals prices, given the continued disappointing inflation metrics out of China. Construction & Materials tops the pile, joined by Insurance and then Chemicals thereafter. US Equity Futures (ES +0.3%, NQ +0.3% RTY +1.2%) are entirely in the green, with very clear outperformance in the economy-linked RTY, with the “Trump Trade” very much still in action.
Top European News
FX
Fixed Income
Crude
Geopolitics: Middle East
Geopolitices: Other
US Event Calendar
DB's Jim Reid concludes the overnight wrap
Although it’s Veterans' Day today, with US bond markets closed (equities open), it's another important week with US CPI (Wednesday) the focal point. US data may not be as heavily scrutinised as usual at the moment as with the Trump victory, the market might conclude that there may be changes in animal spirits in the near-term and policy in the medium-term. On this, any clues on Trump's appointments may be market moving. Case in point the Dollar's rise immediately after the FT reported late Friday afternoon UK time that Robert Lighthizer would be asked to be the US Trade Representative in the new administration. Given how central he's been to Trump's views on trade it was surprising that the market was surprised. However there has been no confirmation of this appointment and other wires have suggested no such approach has been made.
Having said that US data might not be the most important events of the week, outside of CPI the US highlights are the Fed's senior loan officers survey (SLOOS) tomorrow, PPI on Thursday and retail sales, on Friday. There are a lot of Fed speakers so their view of policy post the election will be interesting after Powell navigated this uncertainty well last week. Powell himself speaks again on Thursday. Internationally the key events will be UK employment and the German ZEW tomorrow, Japanese and Eurozone GDP alongside the ECB account of the October meeting on Thursday, and China's main monthly data dump on Friday. See the full week ahead in the day-by-day calendar at the end as usual.
In terms of US CPI, our economists (see "October CPI preview & webinar registration"), suggest that softer energy prices should lead headline CPI (+0.20% forecast vs. +0.18% previously) to be weaker than core (+0.26% vs. +0.31%) leading to a YoY rate that picks up a tenth in the headline to 2.5% but with core staying steady at 3.3% even if the 6-month rate would dip a tenth to 2.5%. Remember though that in the last several years the second half has been more seasonally favourable to inflation so it's possible we're coming towards the end of that help.
For context, and due to the election result, our economists are leaning towards core PCE inflation being upgraded from 2.2% in 2025 to around 2.5% and by around 0.5pp to 2.5% in 2026 as tariffs kick in. For growth the 2025 upgrade is likely to be from 2.2% to 2.5-2.75% but with 2026 downgraded a few tenths to 2% as tariffs offset the fiscal boosts. So the outlook becomes more complicated from here with most uncertainty around how aggressive the tariff regime will be. See Post election: Fiscal fuel trumps trade tensions for Fed for more on this and FOMC recap: Don't hurry, Fed happy for the Fed implications where our economists believing now that the Fed may not be able to cut below 4%. Back in mid-September Dec 2025 Fed futures contracts were pricing in 2.78% so this is yet another example (around the 8th time) in this cycle where the market has got far, far too optimistic in terms of how much the Fed will be able to cut rates. For completeness, a reminder that our European economists have reacted to the US election result by taking their terminal ECB forecast to 1.5% (from 2%) due to the impact of the likely new trade policy.
Asian equity markets are mostly trading lower this morning after Beijing’s latest stimulus measures largely underwhelmed, and the release of weak inflation data over the weekend. Across the region, the Hang Seng (-1.65%) is the biggest underperformer, after initially sliding almost -3.0%. The Shanghai Composite (+0.25%) has just nudged into positive territory as I type though after a weak morning session. Elsewhere, the KOSPI (-0.87%) is trading noticeably lower, while the Nikkei is fairly flat. S&P 500 (+0.18%) and NASDAQ 100 (+0.25%) futures continue to rise.
Back to China, at the very end of last week the National People’s Congress announced a debt swap program worth about 10 trillion yuan ($1.4 trillion) to improve local government finances. However, the stimulus package disappointed market expectations as it lacked direct fiscal stimulus and targeted measures to improve the housing market. Our China economist reviewed the package and suggests that the government clearly believes the current measures will help them hit their 5% growth target for 2024 without needing to go further at the moment. He also believes they are keeping some powder dry for the imposition of tariffs in 2025 and beyond. So perhaps we'll see more targeted measures at the NPC next March.
Over the weekend, the Chinese inflation rate rose +0.3% year-over-year in October, missing expectations of a +0.4% increase and lower than the +0.4% gain seen in September. Inflation fell for the second straight month, dropping to its lowest in four months. Meanwhile, the PPI slipped by -2.9% year-over-year in October, marking the 25th consecutive month of decline, after a -2.8% drop in September and worse than the -2.5% decline forecast by Bloomberg.
Looking back at last week, US assets performed incredibly strongly after Trump’s win. Indeed, the S&P 500 was up +4.66% (+0.38% Friday), which is its best weekly performance of 2024 so far. Moreover, the gains mean the index has now surpassed its previous peak, with Friday marking its 50th record high of 2024. The gains were led by the more cyclical sectors, with consumer discretionary stocks posting a +7.62% advance last week, whilst the KBW Banks Index was up +8.42% (+0.31% Friday).
That rally was evident among other asset classes. In credit, US IG spreads tightened by -9bps (-1bps Friday) to 74bps, which is its tightest level since 1998. And HY spreads moved -19bps tighter (-11bps Friday) to 256bps, their tightest since 2007. Even sovereign bonds recovered their losses from earlier in the week, with the 10yr Treasury yield down -8.0bps (-2.3bps Friday), despite a +16.1bps surge on Wednesday after the election result became apparent. The front-end did see a modest sell-off, with the 2yr yield up +4.6bps last week (+5.5bps Friday). 2s10s is back to 5bps having been as steep as 22bps in late September.
Outside the US, there was a more mixed performance, with European assets struggling by comparison. For instance, the STOXX 600 fell -0.84% (-0.65% Friday), posting a third consecutive weekly decline. And there was a big underperformance for the STOXX 600 Automobiles & Parts Index given the prospect of higher tariffs, which fell -3.56% (-1.35% Friday). In the bond space, 10yr bunds were down by -3.9bps (-7.9bps Friday). That said, even as European assets struggled, there was a much better performance in Asia, where the Nikkei rose +3.80% last week (+0.30% Friday), whilst the Shanghai Comp was up +5.51% (-0.53% Friday).
Other notable moves included the euro (-1.07%) falling to its weakest against the dollar since June at 1.0718, while Bitcoin posted new record highs, rising to $76,450 on Friday. It's traded as high as $81,832 this morning after a further surge over the weekend. In commodities, Brent crude was +1.05% higher over the week to $73.87/bbl, despite a -2.33% retreat on Friday that in part followed an underwhelming fiscal announcement out of China.