Macroeconomics: The Day Ahead for 3 November 2026

Overview

The next 48 hours have the US mid-term elections and the political fall-out as the focal point, with the latest RBA rate hike to digest, alongside a relatively light schedule of statistics and a number of central bank speakers. With the reaction function of the US administration remaining as unpredictable as it has been, market reaction is likely to be speculative. The key questions are likely to centre on whether there is a re-escalation of the conflict with Iran, or more concerted efforts to return to mediated negotiations; the implications of the AI investment boom, above all in regulatory terms; how the new Congress might end up in a disconcerting confrontation with the White House; and what the current Congress (in power until January) might pass in legislative terms in the meantime.

Earnings are plentiful and span a large cross-section of the economy. Saudi Aramco will get top billing, while chipmaker AMD will be closely watched following last week’s Intel disappointment and yesterday’s Apple results. Marathon Petroleum and Suncor also feature on the energy side, while ADM and Mosaic headline for the agricultural commodity sector.

The IEA’s Global Gas Security Review & Q4 Gas Market Report will also attract attention, even if it covers a good deal of well-trodden ground. This includes the relative strength of supply in the US and Canada, Europe’s vulnerability heading into the winter heating season, and the risk that prolonged cold snaps could increase competition with Asia for LNG supplies. The report also notes that global LNG supply is forecast to fall by a record 3.0% this year.

Elections, Geopolitics and AI Investment

US election days are often quite subdued in volume terms, but that may not be the case today as contradictory signals continue to emerge from the Middle East and Ukraine conflicts. On the one hand, there is ongoing discussion of current or potential negotiations; on the other, there has been the latest US attack on Qeshm Island, while infrastructure attacks in both Ukraine and Russia remain relentless.

Meanwhile, fundraising by AI and technology sector companies continues unabated. Alphabet, Meta (recently placed on negative credit watch) and Microsoft are all selling or preparing sizeable debt issues at wider spreads. Oracle has not only raised funds via a debt offering but has also launched a secondary equity offering at an 11% discount, raising a further $20 billion in total.

As one Chinese official observed overnight, the risk that AI-related investment crowds out funding for ‘traditional’ industries, while amplifying already elevated concentration risks, remains apparent and may be exacerbated by poor government fiscal positions. In this respect, one relatively under-reported development was the Japanese government’s decision last week to gradually reduce petrol subsidies over the coming months due to fiscal costs, which may add to inflation pressures.

Australia, Hong Kong and US Data

In terms of the regular macro schedule, the 6-3 vote split on the RBA’s latest and expected 25 bps rate hike does signal that rates may be held in December, although Governor Bullock was keen to stress that inflation risks remain tilted to the upside and that rates may need to rise again.

At the same time, the split highlights that some RBA policy board members are increasingly conscious that, with a cumulative 125 bps of rate hikes, the risk of tipping the local economy into recession has become significant. This is a dilemma that other central banks are likely to face to varying degrees as 2027 approaches.

Turning to the data, the stronger-than-expected 1.9% q/q and 5.2% y/y rise in Hong Kong Q3 GDP was driven primarily by export strength, particularly in electronics. While this probably overstates the underlying momentum to some extent, it nevertheless confirms that, following a prolonged period of sub-par growth, the local economy has regained much of its prior strength.

Otherwise, the only other likely market mover will be the first of this week’s US labour market indicators, JOLTS Job Openings, which are forecast to edge up to 7.164 million from August’s 7.079 million. However, given that this series is frequently subject to significant revisions, it remains an imperfect indicator of underlying labour demand.