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US week ahead: midterms, jobs data and a possible Fed hike

In short

  • On Monday the US ISM manufacturing index is due (consensus 54.7, previous 54.5) and on Wednesday ISM services (expected 54.7, previous 54.9).
  • On Tuesday 3 November the US midterm elections are held: 35 Senate seats, all 435 House seats and 36 governorships. Polymarket puts a Democratic sweep at 70%, a Democratic House with a Republican Senate at 24% and a Republican sweep at 7%.
  • On Friday 6 November the US jobs report is due: consensus +55,000 jobs (29,000 previously) and unemployment at 4.2%. The Fed held at 3.75–4.00% on 28 October by 10–2, and the chance of a December hike is about 75%.

The US events that matter this week are Tuesday’s midterm elections and Friday’s jobs report, with one question hanging over both: will the Fed raise rates in December? On Friday we wrote about US labor costs and the odds of a Fed hike; here is the calendar for the week.

What happened

The calendar, per Newsquawk: Monday, ISM manufacturing; Tuesday, the elections; Wednesday, ISM services; Friday, the jobs report (usually 8:30 a.m. Eastern). Expectations for the jobs data include average hourly earnings up 0.3% on the month and 2.9% on the year. Barclays expects +50,000 jobs and unemployment of 4.1%.

The Fed held at 3.75–4.00% on 28 October by a 10–2 vote, with two members wanting a hike. Third-quarter US GDP grew 3.4% annualised and core PCE is 3.1% year on year. CME FedWatch shows a chance of about 74.9% for a December hike (FinanceFeeds). Weak jobs numbers would give the market an argument against a hike; strong ones an argument for it. That describes the market’s logic and is not a forecast.

Markets are already on edge: the S&P 500 closed Friday at 7,578.97 (−1.83%) and the Nasdaq Composite at 25,442.31 (−2.84%). The 10-year Treasury yield was 4.917% and the 2-year 4.569% (2:31 p.m. New York time), and the VIX was about 22.75 (TheStreet).

What it means for you

The math: $1,000 in an S&P 500 index fund lost about $18.30 on a day like Friday’s (−1.83%).

A 0.25-point rise in a 30-year mortgage rate, from 6.5% to 6.75% on $300,000 (illustrative rates), adds about $50 a month ($1,896.20 to $1,945.79), roughly $595 a year. Mortgage rates do not move one-for-one with the Fed’s rate; the 10-year Treasury yield, 4.917% on Friday afternoon, is a closer guide.

Live prices: stock market prices and gold prices in the US.

Bottom line

This week brings US ISM data, the midterm elections on 3 November and the jobs report on 6 November (consensus +55,000), with the Fed at 3.75–4.00% and about a 75% chance of a hike in December. The S&P 500 closed Friday at 7,578.97, down 1.83%.

Sources: Newsquawk · FinanceFeeds · TheStreet

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For information only. This is not investment advice.

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