Market Outlook in A Divided Government

What’s in Today’s Report:

  • Market Outlook in a Divided Government
  • Macro Landscape Beyond Politics (It’s Getting More Positive)
  • FOMC Preview

Futures are sharply higher again thanks to momentum from Wednesday’s rally, combined with more than expected QE from the Bank of England.

The Bank of England will increase its QE program by 150 billion Pounds, larger than the expected 100 billion, underscoring that global central banks are become more active in supporting their economies.

Politically, markets expect Biden to reach 270 electoral votes today with the official call of Nevada (which would put him exactly at 270).  The market is viewing the election as largely decided despite what will be a myriad of legal challenges.

Today the big event is the FOMC Announcement (2:00 p.m. ET) and Fed Chair Press Conference (2:30 p.m. ET).  I’d expect the Fed will keep a lower than normal profile given the election uncertainty, but the market’s focus will be any commentary that implies it’s open to more QE (if they don’t mention it, we could see mild disappointment like we saw in September).

Beyond the Fed and election headline watching, we also get weekly Jobless Claims (E: 745K) and markets will want to see that number continue to decline.