Key developments

Oil reprices diplomacy: Brent lost 8.7% yesterday, taking its three-session decline to 19.6%, and slipped towards $93.5/b this morning. Markets anticipate faster US-Iran diplomacy following the election, stripping out war-risk premium despite falling US crude inventories.

Equities rally unevenly: The S&P 500 gained 1.6% as investors priced tighter constraints on fiscal expansion following the Democratic sweep in the US midterms. Megacap technology rallied, but chipmakers fell on expectations of greater restraint on AI capital spending.

Bonds extend gains: Lower oil prices pulled inflation breakevens down, helping the US 10-year yield fall 8bps yesterday before reaching 4.84% this morning. Revised Treasury guidance also raised prospects of smaller long-dated auctions in 2027, prompting dealers to cut issuance forecasts.

Gold regains ground: A weaker dollar and falling yields lifted gold 3.3% yesterday, with prices approaching $4,140/oz this morning. India also benefited from cheaper oil: its 10-year yield reached 7.11%, while the rupee strengthened to 94.36/$.

Egypt’s pound recovers: The currency appreciated 1.1% yesterday as oil prices fell and with the additional tailwind of last week’s surprise 100bps hike. New external financing from the World Bank provides further support, but October’s unchanged 47.2 PMI signals persistent private-sector weakness.

Eurozone tightening remains possible: October inflation rose to 4.0% year-on-year, matching forecasts, while core held at 2.5%. Policymakers signalled a potential December hike, although front-end yields eased as investors weighed contained underlying inflation against growth risks.

Today’s major data

UK rates, US jobs: At 16:00, the Bank of England is forecast to raise Bank Rate 25bps to 4.0%. US initial jobless claims follow at 17:30, with consensus at 196,000 for the week ending October 31.