Elon Musk Can Keep Giving $1m to Voters, Judge Rules

Economic

Political

Summary:

Elon Musk's political group can keep awarding $1m (£722,000) to voters in swing states, a judge has ruled.

The giveaway by Mr Musk's America PAC is set to end on Tuesday, and the final recipient has already been determined, a lawyer for the billionaire said in a court hearing on Monday.

In a surprising turn, the lawyer revealed that people receiving the money have not been chosen randomly in a lottery-style contest, as many believed, but were selected by the group.

Philadelphia District Attorney Lawrence Krasner had sued to stop what he called an "an illegal lottery" after Musk announced he would give the money to one voter in a swing state each day until Election Day.

Pennsylvania Judge Angelo Foglietta did not immediately give a reason for the ruling, made a few hours after the hearing, according to the Associated Press.

“The $1 million recipients are not chosen by chance,” the lawyer, Chris Gober, said during the hearing, according to the Associated Press. “We know exactly who will be announced as the $1 million recipient today and tomorrow.”

Mr Gober told the court that America PAC has already determined the final recipient will be a voter from Michigan, US media reported.

On Monday, America PAC announced a man named Joshua in Arizona had been awarded the day's sum.

In a post on X, formerly Twitter, which Mr Musk owns, the group added: "Every day until Election Day, a person who signs will be selected to earn $1m as a spokesperson for America PAC."

But when the world's richest man unveiled the giveaway last month, many believed it was a random drawing for registered voters who signed a petition supporting the First and Second Amendments of the US Constitution.

“We are going to be awarding $1m randomly to people who have signed the petition, every day, from now until the election," Musk told a campaign event.

A few days later, the US justice department warned that the group could be breaking election laws, which forbid paying people to register to vote. Krasner's office sued to stop it.

Mr Musk has been aggressively campaigning for Republican White House candidate Donald Trump in swing states across the country, and his committee has been pushing hard in Pennsylvania, where polls suggest Trump is in a tie with his Democratic rival, Vice-President Kamala Harris.

A lawyer in Krasner's office told Reuters that Mr Gober's comments in court were "a complete admission of liability".

During the hearing, prosecutors played a video where Mr Musk, who is also the chief executive of SpaceX, said that "all we ask" is that the winners serve as spokespeople for the group, Reuters reported.

But Chris Young, the director of America PAC, said in court that the recipients are screened and must have values aligned with the group, US media reported.

Those who receive the money sign non-disclosure agreements that block them from publicly discussing the terms of their contracts, according to Reuters.

Mr Musk did not attend Monday's hearing.

Also on Monday, Joe Rogan released an episode of his podcast featuring a nearly three-hour interview with Mr Musk.

In a post promoting the podcast on X, he said he would be endorsing former President Donald Trump.

"He [Musk] makes what I think is the most compelling case for Trump you'll hear, and I agree with him every step of the way," Rogan wrote.

Source: BBC

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Economic

The US dollar and yields have enjoyed a strong rally over the past five weeks, thanks to hotter US data, Fed members pushing back on rate cuts, and Trump leading in many polls. But with the US election on our doorstep and the potential for a delayed result, could this tie the Fed’s hands at this week’s meeting?

With Fed fund futures implying a 99.7% chance of a 25bp cut this week, it would come as an almighty shock to markets if they didn’t. And unlike other central banks such as the BOJ or SNB, the Fed tend not to surprise much these days. Instead they slowly shape their message to guide markets where they want, with various levels of success and of course failure. This means the Fed are very likely to cut this week regardless of the fact it lands on election week. However…

How the US Election Could Impact the Fed_1

Which way the election swings could dictate the Fed’s forward guidance

The bigger question for traders is if the Fed hint at another 25bp in December. While Fed fund futures imply they will cut in December with an 81.5% probability, those odds could very quickly plunge if Trump wins the presidency as his policies are deemed to be inflationary.

Besides, US economic data remains strong, and the case for higher rates becomes stronger if data continues to outperform overall.

The US economy remains robust, but there are bumps in the road

We know that US economic data has generally surprised to the upside in recent weeks. In fact it began turning for the better back in July according to the Citi Economic Surprise Index (CESI), with data falling shorts of gloomy forecasts through to October before it began to beat more favourable forecasts over the next five weeks. This saw traders drastically scale back their dovish Fed bets and sent the US dollar and yields soaring.

What has since excited doves is the weak NFP payroll last Friday, which saw a mere 12k job added (its lowest since the pandemic). Yes, that is a weak number, but unemployment remains low at 4.1% and average earnings also increased. This makes it tricky for the Fed to be too dovish this week in my opinion, especially if Trump wins.

How the US Election Could Impact the Fed_2

A Trump Presidency and the Fed:

At a fundamental level, Trump's policies are considered to be more inflationary. This implies that another Trump presidency could maintain the elevated levels of the US dollar and the yield curve, or even increase them, on the assumption that the Federal Reserve will need to keep interest rates higher for an extended period. This argument becomes even stronger if US data continues to outperform.

It could also be risk off for sectors and markets tied to trade, given Trump plans to slap a hefty 60% tariff on China’s imports, alongside less chunky tariffs for other trade partners;

Technology, manufacturing, energy, healthcare and consumer goods stocks could fade selling pressure from Wall Street;

USD/CNH could outperform as the USD rallies and China allow their currency to weaken in an effort to maintain competitive for trade;

This could spell trouble for AUD/USD (and therefore NZD/USD) which currently share a strong correlation with the yuan.

How the US Election Could Impact the Fed_3

A Harris Presidency and the Fed:

Conversely, a Harris win could weigh on the USD and yields, as it could allow the Fed more wriggle room to cut in the face of weaker data. I suspect it could also trigger a risk-on rally which should be supportive of commodities and therefore commodity currencies.

AUD/USD and NZD/USD could lead gains against the US dollar in a risk-on bounce;

Wall Street indices are likely to perform, led by the Nasdaq 100 as part of a relief rally;

Copper could bounce alongside other base metals on the aversion of a trade war;

USD/CNH could turn lower as Beijing sighs in relief that another trade war is less likely to materialise.

But what if they election results take too long to arrive?

If neither candidate has secured the 270 votes by Thursday to secure their place in the Whitehouse, the Fed may need to revise their message. And I suspect the Fed will keep their cards close to their chest and not feel inclined to be too dovish if they cut, assuming that they do at all.

Conclusion

A Trump win could seriously hamper the Fed’s ability to cut again in December;

If the election drags on and we do not know the winner by Thursday, the Fed may feel inclined to keep the lid on any forward guidance;

And knowing markets, that will be taken as ‘no cut for Christmas’ and potentially send the USD higher;

A Harris win could allow the Fed to deliver a dovish cut, prompt a risk-on rally for commodities, commodity FX and Wall Street.

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ACY

Economic

Political

Forex

U.S. Election Impact

With the election approaching, markets are positioning for a range of possible outcomes. A victory by former President Donald Trump may lead to an appreciation in the U.S. dollar, supported by expectations of inflationary pressures, a less dovish Federal Reserve, and potentially increased geopolitical tensions. In contrast, a win by Vice President Kamala Harris could initially soften the dollar, although safe-haven demand may persist given uncertainties surrounding the election’s outcome and market reactions. Here’s how different outcomes might influence key currency pairs:

EUR/USD: An election victory by Trump may further strengthen the dollar due to safe-haven demand and fears of increased global trade tensions, adding pressure on the Euro. Conversely, Harris’s win could ease this pressure, allowing the Euro some breathing room, though dovish policies from the European Central Bank (ECB) may still dampen any sustained EUR/USD rally.

Anticipate Volatility from U.S. Elections and FOMC Meeting_1

USD/JPY: Japan’s currency could appreciate if election-related uncertainties heighten, favouring the yen as a safe-haven. However, a Trump victory may put downward pressure on the yen, as it would likely signal broader market risk aversion.

Anticipate Volatility from U.S. Elections and FOMC Meeting_2

GBP/USD: The British pound faces heightened vulnerability given ongoing fiscal challenges in the UK, with contrasting growth outlooks between the UK and Eurozone adding further instability.

Anticipate Volatility from U.S. Elections and FOMC Meeting_3

FOMC Decision on Interest Rates

The upcoming FOMC meeting will offer crucial insights into the Federal Reserve's stance amid fluctuating economic conditions. I’m closely monitoring any signs of a potential rate cut or dovish shift, which could have a significant impact on market confidence and asset allocations. Key scenarios include:

Soft Landing for the U.S. Economy: If the Fed signals a soft landing—a scenario where economic growth slows gradually without triggering a recession—this could sustain demand for U.S. assets, supporting the dollar. Positive foreign capital inflows would likely flow into dollar-denominated assets.

Dovish Indications: Any dovish indications from the Fed, such as the likelihood of further rate cuts, might lead to selling pressure on the dollar, as investor confidence wanes and safe-haven appeal temporarily diminishes.

FX Market Impacts

Breaking down how market sentiment and central bank policies globally could drive currency movements:

EUR/USD: The euro remains under pressure, weighed down by the ECB’s continued dovish stance, a fragile Eurozone recovery, and subdued inflation. European markets have largely priced in the possibility of more rate cuts, creating a floor under the EUR/USD pair. However, a Trump victory could reinvigorate fears of a global trade war, which would further support the USD over the EUR.

USD/JPY: Structural changes in Japanese policy, including a shift away from Abenomics, could strengthen the yen by reducing reliance on dovish policies from the Bank of Japan (BoJ). A tight U.S.-Japan rate differential, especially if the Fed cuts rates while the BoJ holds steady, would also support the yen. I’m maintaining a neutral view on USD/JPY as election outcomes remain unpredictable, though they note that the JPY could rise if Harris wins and promote stability.

GBP/USD: The pound could be pressured by ongoing concerns about the UK’s fiscal outlook and the possibility of additional Bank of England (BoE) rate cuts. However, Credit Agricole suggests that long-term political stability under the Labour government, combined with a policy shift toward gradual EU rapprochement, might provide GBP support, particularly if the UK’s recovery continues to outpace the Eurozone’s.

AUD/USD and NZD/USD: The Australian and New Zealand dollars face headwinds due to investor sentiment toward China’s economy and ongoing U.S. fiscal uncertainties. China’s slowdown adversely impacts AUD and NZD, given their commodity-dependent economies. Additionally, Trump’s potential return could strain the AUD due to trade tensions with China, while the Fed’s rate outlook moderates upside potential for both AUD and NZD.

USD/CAD: The Canadian dollar has been trading in a tight range against the USD, with potential upside pressure if the Bank of Canada (BoC) maintains its current stance while the Fed moves toward easing. Weak global demand and lower energy prices pose ongoing challenges for CAD; however, these effects may be balanced by the BoC's relatively hawkish approach, supporting the currency in the short term.

FX landscape is complex and heavily influenced by U.S. political and global risks. I see limited downside for the USD in the short term, with room for upside, particularly in case of a Trump win, which would likely spur safe-haven demand. CHF (Swiss franc) looks overvalued safe-haven currency, subject to pressures from an overvaluation-driven lack of competitiveness. The SNB may intervene as needed to manage CHF appreciation if global risk appetite weakens significantly.

This week, traders should be attentive to developments in both the U.S. election and Fed policy. These events will shape not only immediate market moves but also broader trends in the FX and asset markets. The evolving political landscape and central bank communication are set to be influential drivers of market sentiment, underscoring the need for careful positioning in a potentially turbulent period.

By considering these multi-layered influences, market participants can better navigate the volatility, especially in FX, as major economic and political shifts unfold.

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FastBull Featured

Daily News

Economic

[Quick Facts]

1. Trump and Harris prepare for final push in battleground states.

2. U.S. dollar sees its biggest drop since late Aug. amid Trump Trade doubts.

3. The Dow drops and the VIX rises above 20.

4. A survey shows OPEC's oil production rose in October.

5. Traders sell emerging bond ETFs as a hedge ahead of U.S. election.

[News Details]

Trump and Harris prepare for final push in battleground states

As the U.S. presidential election enters its final countdown, both Trump and Harris are making a final push in a highly competitive race. Both candidates describe the election as a critical moment for America's future.

Despite numerous shocking events that have blurred the focus of the election in recent months, voters' opinions remain highly polarized, both nationwide and in the seven key battleground states that will likely determine the outcome. The result may not be clear until a few days after voting ends on Tuesday.

According to data from the University of Florida's Election Lab, more than 80 million voters have already cast early ballots. Both candidates plan to make a last-minute push to ensure their supporters vote on Tuesday.

U.S. dollar sees its biggest drop since late Aug. amid Trump Trade doubts

On Monday, the Bloomberg U.S. Dollar Spot Index fell 0.7%, while U.S. Treasury futures saw a slight increase. The Mexican Peso rose by over 1%, leading gains among emerging market currencies. The prospect of a Trump victory had caused the dollar index to rise to a four-month high last week, but polling data ahead of Tuesday's election led some investors to scale back the so-called "Trump trade." This resulted in the largest drop in the dollar index since the end of August, while U.S. Treasury futures increased. That means bullish bets on the dollar are being revalued.

Investors believed Trump's tax cuts and high tariffs would boost economic growth and inflation, but recent polling data suggests Democratic candidate Harris may be leading in some swing states. Overall, the race remains too close to call, with risks of increased market volatility as Election Day approaches.

The Dow drops and the VIX rises above 20

On Monday morning, the Dow Jones Industrial Average (DJIA) dropped by 100 points, down over 0.29%.

With the U.S. presidential election remaining highly competitive, financial markets are expected to remain volatile this week, with polls on Monday and Tuesday likely to add to market fluctuations. Recent polls show a tight race between Democratic Vice President Harris and former Republican President Trump in the 2024–2028 White House race. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) rose above 20, indicating increased market anxiety.

A survey shows OPEC's oil production rose in October

A Reuters survey found that, due to the resolution of Libya's political crisis, OPEC oil production rebounded in October from the lowest level of the year in September, despite further efforts from Iraq to comply with OPEC+ production cuts.

The survey showed OPEC's oil production in October was 26.33 million barrels per day, an increase of 195,000 bpd from September's total. Libya saw the largest increase, while Venezuela also raised production to 860,000 bpd, its highest level since 2020, according to the Reuters survey.

Traders sell emerging bond ETFs as a hedge ahead of U.S. election

With increasing uncertainty surrounding the U.S. election, investors pulled money out of emerging market bond ETFs in October, reflecting caution about market risk.

The iShares JP Morgan USD Emerging Markets Bond ETF (EMB.US) saw $732 million in outflows in October, the largest single-month drop since March. The Invesco Emerging Markets Sovereign Debt ETF (PCY.US) also saw $78 million in outflows.

The extra yield investors demand to own the dollar debt of emerging-market governments rather than Treasuries fell 23 basis points to around 337 basis points in October, its third straight monthly decline, according to a JPMorgan Chase & Co index.

This shift is mainly due to market skepticism regarding Trump's election prospects. While markets had previously bet on Trump's victory, as Harris' support in key swing states has risen, markets are now reassessing.

As markets await the election results, U.S. Treasury yields and the dollar reversed some of their earlier gains in New York trading.

[Today's Focus]

UTC+8 09:45 China Caixin Services PMI (Oct)

UTC+8 11:30 Reserve Bank of Australia November Interest Rate Decision

UTC+8 12:30 Reserve Bank of Australia Governor Bullock's Monetary Policy Press Conference

UTC+8 14:45 Switzerland Unemployment Rate (Oct)

UTC+8 23:00 U.S. ISM Non-Manufacturing PMI (Oct)

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Economic

The countdown to the US presidential election is almost finished, with the polls opening on Tuesday. Market participants have been speculating about the economic agendas of both candidates for a while, trying to discount the likely market impact on the key asset classes. Putting the market analysis aside, the focus of this report is on the procedural aspect of November 5.

What is at stake on November 5?

Apart from the US presidency, with the new President officially taking over on January 20, 2025 when Inauguration Day occurs, 435 members of the House of Representative and 33 Senators will be elected. It is critical for the new president to have the support of the Congress in order to be able to implement his/her government plan. Otherwise, deadlock will ensue, tensions will remain high, with the usual political shenanigans taking place at every major issue, for example, during the debt ceiling discussion.

How is the US president elected?

Voters at each state elect electors. On December 17, the Electoral College will convene and vote for the new President. There are 538 electors with both Harris and Trump aiming to secure the support of at least 270 electors. It is worth nothing that these electors are expected to vote in favour of the candidate that earned the highest number of votes on November 5 at the state they represent.

When does voting stop?

In the majority of US states, polls will close at around 9pm ET (2am GMT). Alaska is the last to close its polls at 1am ET (6am GMT) while California has a deadline of 11pm ET (4am GMT).

Which are the safe states, where an upset could signal a surprise election result?

There are some traditional states that tend to consistently vote for Democrats or Republicans since the 1970s. For example, Alabama, Alaska, Arkansas, Idaho, Kansas, Kentucky, Mississippi, Missouri, Montana, North Dakota, Oklahoma, South Dakota, Tennessee, Texas, Utah, West Virginia and Wyoming are called red states for usually voting in favour of the Republican candidate.

On the flip side, California, Connecticut, DC, Delaware, Hawaii, Illinois, Massachusetts, Maryland, New Jersey, New York, Oregon, Rhode Island, Vermont and Washington tend to support the Democratic candidate.

Which are the key battleground states?

Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin will determine the election outcome. They have a total of 93 electors. In 2020, President Biden won Arizona, Georgia, Michigan, Nevada, Pennsylvania and Wisconsin, losing only North Carolina to Trump.

In 2016, Trump won Arizona, Georgia, Michigan, Pennsylvania, North Carolina and Wisconsin, but lost Nevada to Clinton.

Why TV channels “call” the states?

The Associated Press and the big US channels tend to “call” the US states for one of the two main candidates fairly quickly. This is based on actual votes, exit polls and their own analysis of the remaining votes to be counted. This is not the official result, but it is considered a very secure estimate.

Does it take a long time to count the votes?

Most states allow absentee voting and voting by mail, and they have the right to count these votes during the time that polls are still open, sometimes ever before November 5. This means that once polls are closed, they can quickly announce the results of these votes. Word of caution though as these early figures might not be representative of the final result.

Colorado, Florida and South Carolina are among the states that tend to quickly count their votes. Others like Pennsylvania, Nevada and Minnesota are usually slow in counting the cast ballots.

Who declares the results?

There is no single federal agency that tallies the results and declares the winners. This means that states will declare, officially announce the winner, wherever counting has completed. For most states this declaration will take place in the 12-24 hour window after polls close, but it can take much longer in certain cases.

When will we know the final result?

If one of the two main candidates does not have a clear lead in the swing states, it could take a few days for the final result to be declared. For example, in 2020, Biden was officially declared the winner when the Pennsylvania result was confirmed, four days after the election day.

Additionally, most of these key states automatically recount all the votes if the margin is less than 0.5% or 1%, potentially postponing the final result even further.

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Owen Li

Economic

Political

An investor dubbed the “French whale” has sparked fascination with his lavish bets on the outcome of this year’s US presidential election. Fredi9999, as one of his accounts is known, is wagering at least $30 million that Donald Trump will win in the Polymarket prediction market.

That’s peanuts compared with what may be the biggest bet of all on the 2024 election, which is what Trump himself stands to gain — or lose. Through his ownership stake in Trump Media and Technology Group, the stakes for Trump amount to at least $4 billion, which is more than all the presidential election bets on Polymarket combined.

Trump Media, known by its ticker symbol, DJT, is broadly viewed as the one financial asset serving as a binary bet on whether Trump wins or loses the presidential race. If Trump wins, DJT, which houses the Truth Social networking app, could gain a surge of users and revenue, making it a viable social media network able to compete with the likes of X (formerly Twitter) and Facebook. But if Trump loses, DJT’s already weak financials could erode further, threatening the whole business. Some investors think the stock could go to 0, imperiling the company.

Shares of DJT have been wildly volatile during the last two months, surging or crashing based on market perceptions of whether Trump is likely to win. There’s a tight correlation between Trump’s odds in betting markets and the direction of DJT shares.

Trump Has Billions Riding On Whether He Wins_1

In mid-September, for instance, Democratic candidate Kamala Harris pulled ahead of Trump in betting markets. DJT shares sank and closed September at $12.15, the lowest level since the company went public back in March.

Then Trump’s election odds improved, hitting 64% in the Real Clear Politics aggregate on Oct. 29. On the same day, DJT closed at $51.51, a 324% gain from its September low. There was no company news during that time indicating any sort of improvement in the company’s financial or operating performance, which is weak.

During the last few days, Trump’s election odds have fallen to around 55%, while DJT shares have slipped to about $31. Polls show the two candidates are essentially tied, with Harris possibly benefiting from a wisp of last-second momentum.

Trump owns 57% of DJT, and the value of his stake has yoyo-ed in proportion to the stock price and his election odds. In July, before Harris replaced Joe Biden as the Democratic nominee, DJT’s market value was around $7.7 billion, putting the value of Trump’s portion at about $4.4 billion. At its low point in September, DJT was worth $2.4 billion, with Trump’s share at $1.4 billion. After the October surge, DJT was worth $10 billion, and Trump’s share $5.7 billion.

So from the September bottom to the October top, the value of Trump’s shares varied by $4.3 billion. That’s probably the minimum loss Trump would suffer if he loses the election, because that swing is based on a minimum DJT price of $12.15. If the stock goes to 0, Trump’s losses from peak to trough would be $5.7 billion, the value of his shares as of Oct. 29.

Trump Has Billions Riding On Whether He Wins_2

Many investors have been placing “Trump trades” on assets they think will do better or worse if Trump gets elected, including buying DJT stock outright or buying options that could pay off based on future movements in the stock price. Other Trump trades include cryptocurrency, private prisons, and gold. But it’s hard to imagine any single investor other than Trump could have more than $5 billion riding on the election outcome, making Trump the ultimate election whale.

Trump would not be losing $5.7 billion that he actually invested in the company. Trump made little or no financial investment in DJT, instead adding to its value through his personal brand and the attention he’s able to bring to its main product, Truth Social. Other investors plowed about $1 billion into the company in its startup phase, however, and they’d lose much of their principal if the stock collapses. If DJT does crater, the company could still operate as a non-public company if somebody bought it or its owners chose to take it private.

Trump would still take a massive financial hit if he loses the election and DJT craters. In late October, with DJT near its peak, Bloomberg estimated Trump’s net worth to be around $6.6 billion, and most of that was his stake in DJT. Without that stake, Trump’s net worth might be around $1 billion. That’s obviously a lot, but much of his wealth is illiquid, and if defeated, Trump would face heavy claims on his wealth long into the future.

Trump is already on the hook for an $83.3 million judgment against him in the E. Jean. Carroll defamation case and for $454 million in a New York fraud trial. Those payments are on pause as Trump appeals them. Trump is still entangled in three criminal cases that could drag on for years as legal bills pile up. Two of those cases are federal cases Trump could have dismissed if he wins the White House — but will likely have to keep fighting if he loses. The third is a Fulton County, Ga., case that Trump can’t close down even if he’s president.

If Trump loses, he would also endure reputational damage as a 78-year-old two-time presidential loser with no obvious next move. Trump stokes his fame, branding power, and fundraising ability by constantly staying in the news and frequently delighting his followers. If he fades into the background, all of that fades with him. All told, it could mark the greatest financial stake ever in the outcome of a presidential election.

Source: yahoo finance

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Economic

Global Macro and Markets

Global Markets: The Trump trade began to unwind yesterday on reports that Kamala Harris was leading in Iowa, a state which neither party have made a battleground, and which could be a bellwether for nearby swing states. 2Y Treasury yields fell 4.6 basis points, and 10Y yields were down 9.9bp to 4.285%. Voting starts later today, but it could be Thursday / Friday Asia time before we have more of an idea of who will likely emerge as the winner of this very tightly contested election. Markets are likely to be volatile in the meantime. EURUSD had risen sharply at yesterday’s open and traded above 1.0910 briefly before settling lower at around 1.0880. The pattern of sharp early gains followed by some subsidence was reflected in most G-10 currencies. Asian FX was mostly stronger on Monday. The THB led the charge with a 0.56% gain, followed by the SGD and CNY. USDCNY is now 7.1009. The PHP bucked the trend, rising to 58.3450. US equities were softer yesterday, probably as rising prospects for a Harris win dampened thoughts of corporate tax cuts.

G-7 Macro: OK, sure, there is some US macro data today, but let’s not pretend anyone will watch the service sector ISM data today while the final stages of this US election rage. The same goes for the smattering of European service PMI and production data. Today is all about US politics.

Australia: The RBA will meet today to consider their monetary stance. We see nothing in the recent data to shift them from their position of leaving rates at 4.35% for as long as it takes to ensure that inflation sustainably comes within their target. 100% of the Bloomberg consensus seems to agree. The statement text will be worth a look to see if the position is shifting at all, though we don’t expect any significant semantic changes.

Indonesia: 3Q GDP is due around midday today. This figure implausibly hugs 5% so tightly in most quarters, that no one looks at it very much anymore. Deviations to two decimal places are irrelevant. The consensus is for exactly 5.0%. Why not?

Philippines: October CPI inflation is released at 0900 SGT/HKT, and is expected to edge higher to 2.3% YoY, though still well within BSP’s target. What happens next with policy rates will depend not just on Philippine inflation but on how Asian currencies like the PHP respond to the US Presidential election result. A period of uncertainty lies ahead until we have more clarity.

South Korea: Consumer price inflation eased to 1.3% YoY in October from 1.6% in September, below the market consensus of 1.4%. The fall in food and energy prices (-0.7%) was the main reason for the moderation, but core inflation excluding food and energy also slowed slightly to 1.7% from 1.8% in the previous month (vs 1.8% market consensus). Last year's high base also contributed to the slowdown.

The gradual phasing out of fuel tax cuts in November and December is likely to push inflation temporarily back up to close to or above 2%. In addition, the increase in industrial electricity prices last month may continue to push up some goods prices with a time lag. Nevertheless, we continue to expect inflation to remain below 2% for most of next year, but the cumulative pressure of price hikes in utilities and public service fees will spike inflation from time to time.

We don't think today’s lower-than-expected inflation will prompt the Bank of Korea to cut interest rates at its November meeting. Although inflation is clearly trending slower, we believe that the Bank of Korea's interest rate cuts will be limited given the imbalances in financial markets. The BoK would like to monitor the impact of its earlier cut on the housing market. However, the three-month forward guidance could change in a dovish direction. At the last meeting, one board member expressed that further easing should be considered in three months. Our baseline scenario is for an April cut, which is quite hawkish compared to the market consensus, but we acknowledge that the probability of an earlier cut than our current forecast is increasing.

South Korea inflation slowed more than expected but is expected to rebound by the end of this year