November 2024 Monthly Report

Read the Ballinger Monthly Report for November below.

Over the summer, softer labour market and growth signals shaved nearly 100bps off the 10-year Treasury yield and sank the dollar, as markets repositioned for an aggressive Federal Reserve easing cycle. That narrative was turned on its head by a flood of stronger macro data in October, and now, it looks like US economic exceptionalism never left.  And while the Fed is slowing down, many others are speeding up. The ECB has switched to back-to-back cuts, the Bank of Canada has delivered its first 50bp move, and the RBNZ may even go for 75bps in November.

Yet that has not been the dollar’s only tailwind. Rising bets on a Trump election win, although tempered this week, had a hand in lifting Treasury yields higher. The macro divergence and the election uncertainty pushed the risk-sensitive G10 to the bottom of the pack (NOK, SEK, AUD, NZD), with the yen also falling more than 5% as hopes faded for further rate hikes. Surprisingly, it was the euro that suffered the least against a rising dollar, thanks in part to some stronger-than-expected Q3 growth data.

The US election is by far the biggest event in November, and markets are looking for a sharp move in one direction or the other. At the same time, we have key central bank decisions in the US, UK, Sweden, Norway, and Australia, who may all alter their rhetoric if Trump emerges as the winner.