The marquee event this week is obviously the US midterms.
You can read my (deliberately provocative) preview here. The short, inoffensive version goes like this. Republicans are likely to suffer a series of meaningful setbacks, with the only real question being whether the GOP can cling to a Senate majority.
Whatever the outcome, it won’t change the fact that America’s a de facto autocracy until 2028 and maybe beyond. (In a clip that aired on Sunday, Donald Trump said he’d “love to run again if I had the chance,” referring to a prospective third term. He was polite enough to concede that the relevant constitutional language is “very exacting.”)
On the macro front, it’s jobs week. Consensus is looking for something in the neighborhood of 60,000 from the NFP readout.
Market participants will be keen to get a look at the revisions. Recall that the last jobs report was a real bummer, printing just 29,000 on the headline.
Hiring’s been pretty uneven throughout Trump’s second term, in keeping with his mercurial approach to… well, to everything. Economists will tell you there’s some math behind the 60,000 consensus for Friday’s BLS headline, but if we’re honest, it’s a total shot in the dark. I’d be no more surprised by +189,000 than I would be by -67,000.
For now, traders are sticking with their bets for a December Fed hike following last week’s (completely apolitical) hold. I suppose a move at 2026’s final policy meeting is at least as likely as not, but trust me (and if you can’t this guy, who can you trust, right?): Kevin Warsh will take any excuse to avoid raising rates again. Lest Bill Pulte should start looking into his papers. And God knows Kevin’s got a lot of paperwork, rich as he is.
Speaking of Pulte, Lisa Cook was due at The White House this week for an inquisition on the unproven mortgage fraud charges Trump and Bill ginned up in an effort to kill two Parteiadlers with one putsch (my Reich jokes are more effective than your clichéd Niemöller quotables) by removing a black woman from a position of authority and freeing up a Fed board seat at the same time. That “hearing” has been delayed until December, which presumably means Cook will be present at that month’s FOMC meeting and voting again for a hike.
Prior to Friday’s jobs report, markets will get the usual labor market appetizers. ADP’s seen at 65,000 on Wednesday, JOLTS at 7.1 million on Tuesday and it’s now or never for the seasonal hiring push in Thursday’s Challenger update.
In terms of event risk, the sleepers are Treasury’s borrowing estimate (Monday) and the QRA (Wednesday). If Scott Bessent’s interested in reviving a bond rally that’s got 10s trading ~35bps below the multi-decade highs reached early last month, he has an opportunity this week. As discussed in “À La Janet?“, Bessent could light whatever’s left of UST short positioning on fire simply by bringing forward cuts to long-end coupon auction sizes.
I think such cuts are an inevitability in 2027, and considering Bessent’s an activist Treasury secretary who’s shown about as much regard for the “regular and predictable” issuance promise as his boss shows to democratic principles, it’s not obvious why he’d wait. Put differently, Bessent surely knows he can spark another long-end rally this week, and that’d be politically advantageous for Trump. So what’s stopping him?
That said, I’ll defer to the consensus among rates strategists who say the more likely outcome on Wednesday is another QRA language tweak, as opposed to making lower coupon auction sizes for 20s and 30s a “now” thing.
Also on deck in the US this week, in order of importance: ISM manufacturing (Monday, seen at 54.6), ISM services (Wednesday, seen at 54.9) and the preliminary read on University of Michigan sentiment (Friday, seen at “FML”).
Oh! And Trump’s Gulf war is tentatively scheduled to restart at 12:01 AM ET on November 4, so be wary of that. Particularly if you’re an elementary school student in Iran.
