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Midterms likely to drag on

Major US indices closed positive but remained full of uncertainty as the Midterm results are far from known on an equally split Senate. DJIA rose to an August high of 33400, continuing to lead sentiment in US equities, but S&P 500 and Nasdaq remain stuck below the 4000 and 11000 handles. Price action might change following the CPI release on Thursday.

Key factors for today:

• US elections likely to last longer than anticipated, all eyes on CPI


• Gold and oil impacted by risk aversion, WTI traders have more to deal with


• Germany looking into increasing its 2023 debt to €45 billion


• BOE’s Pill hints at more interest rate hikes as inflation remains entrenched


• Second-largest crypto-exchange FXT up for grabs

Midterms too close to call, Senate at odds

Americans went to the polls yesterday, with results being reported through the night. Republicans expected to take control of the House, but critical races for control of the Senate showed no candidates leading, suggesting a protracted contest that could last days or weeks of recounts and lawsuits. Republicans did take control of the House, in any case.

Gold soars 2.50%, WTI drops 3.5% on risk aversion

Sovereign debt yields slipped, with gold rising nearly 50 bucks from 1675/oz to $1720/oz and oil falling to 89/bbl. The generalised move towards safe havens incurred ahead of risk events expected through the week, mainly a still uncertain US election result and US inflation data.

The API also reported a large build in crude oil inventories, partly weighing on oil prices, and the EIA revised its 2023 demand growth forecast downwards. Prices are expected to remain under pressure, with the $86/bbl breakout leading the way to $80/bbl.

Germany eyes €45bn debt increase in 2023

Reports circulated that Germany was looking to increase its net debt target next year but stay within the constitutional limits. The European Commission will present proposals on changes to rules related to higher debt across the shared economy in light of the effects of covid.

EUR/USD formed a double top at $1.01 on the back of a weaker dollar. Parity is back in focus unless bulls flip the resistance to support and head toward $1.02.

BEO (kind of) admits role in inflation

BOE’s Chief Economist Pill gave testimony in the House of Lords, saying that the bank’s decision to prolong QE “may have” contributed to the surge in inflation. He further noted that inflation was largely the result of gas prices but warned that there was a chance inflation could become entrenched, “pointing toward further interest-rate increases”.

GBP/USD closed mixed despite soaring to $1.16 on Tuesday after finding resistance at the round level. $1.14 is back on the radar.

Crypto space shakeup

One of the largest crypto exchanges, FTX, nearly went belly-up and was rescued by arch-rival Binance from a liquidity crisis as customers mass withdrew funds.

Movers and shakers

• Kohnl’s +7% earnings beat estimates, but same-store sales were down. It announced CEO transition process


• CarGurus -22% latest car firm with disappointing results, missing estimates as earnings fell sequentially


• OraSure +16% after reporting earnings well above prior years and announcing new contract awards


• LiveRam +15% after reporting better topline results and raising guidance for the full year


• Upstart -23% after earnings beat on the top and bottom line, and EBITDA fell into negative

On the docket

• EIA reports on crude inventories, with API setting up sentiment already


• Fed’s Barkin speaks. Will he signal support for pace slowing?


• Australian CPI expectations are due overnight

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