A Double Whammy: U.S. Election, FOMC Rate Decision

Market participants are bracing for a long and volatile week amid a double whammy of the U.S. presidential election on Tuesday and the November?FOMC rate decision on Thursday. While Fed officials are well within their traditional blackout period ahead of the next rate decision, the country’s presidential candidates are making a last vocal push to lure in votes with the latest polls showing an extremely tight race.?

This week, as noted, the economic calendar is centered on the Fed’s November FOMC meeting. Following an outsized 50bp cut in September, the Fed is widely expected to continue along a path to easier money policy albeit at a reduced pace with a more tempered pace of 25bps this week.

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The September dot plot indicated the majority of officials see an additional 50bps in cuts this year and 100bps more next year, although nearly as many indicated a reduced forecast of just 25bps or no further cuts in the current year. With no updated release at the November meeting, market participants will be parsing through the statement and listening closely to the press conference for any indications as to what Fed officials are forecasting for the final policy meeting of the year and looking out further to 2025.

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Aside from the Fed, this morning, factory orders fell 0.5% in September, as expected and following a 0.8% decline the month prior. Excluding transportation, however, factory orders rose 0.1% at the end of the third quarter, the largest monthly gain since July.

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Tomorrow, we take a look at the September trade balance, and the ISM Services Index for October. The ISM Services Index rose from 51.5 to 54.9 in September, surpassing the expected increase and reaching the highest reading since February 2023.

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This month, however, the services index is expected to decline from 54.9 to 53.8 in October, remaining in positive territory but potentially marking a two-month low.?

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Turning to Wednesday, weekly mortgage applications will be released, followed by the final October print of the S&P Global U.S. Services and Composite PMIs.?

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Later in the week, on Thursday, weekly jobless claims,?along with Q3 nonfarm productivity and unit labor costs reports, wholesale inventories, and consumer credit.

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Finally, on Friday, we take a last look at the November University of Michigan Consumer Sentiment Index widely expected to increase from 70.5 to 71.0.

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-Lindsey Piegza, Ph.D., Chief Economist