The power of the ballot

US midterms move centre stage following a series of election surprises elsewhere in the world. Markets' AI jitters continue, while Q3 macro data show a strong US economy. The Fed, ECB and BoJ held rates this week, but will likely hike in December. Next week, our Research analysts expect a BoE hike and solid US jobs data.

• US: The FOMC held in October but added language that, in our Research team's view, tees up a December hike, with two hawkish dissents underscoring this lean. This week's data showed strong Q3 private demand and firm core inflation, reinforcing conviction behind our analysts' call for December and January hikes. 
• Euro Area: This week delivered upside surprises on growth and inflation. The ECB held rates but insisted that the direction of travel for monetary policy remains clear. Our Research team continues to expect a final hike in December, with risks tilted towards a further move in Q1 2027.  
• United Kingdom: The Autumn Budget provided limited support to firms and households, accompanied by targeted tax changes. Data continue to show medium-term risks to inflation are contained. Our Research analysts expect the MPC to hike Bank Rate by 25bp to 4% at November's meeting. 
• Japan: The BoJ judged underlying inflation to be consistent with its target and said it will now need to confirm it is durably anchored, as expected. With financial conditions still accommodative and US concerns over JPY weakness, our Research team sticks to their base case of a December hike and a 2% terminal rate.  
• China: China's local leadership reshuffle could revive investment, but through a different playbook. Tighter local fiscal positions suggest a shift from local leverage to central funding, and from an infrastructure race to an industrial-policy race, with risks of duplicative capex and global spillovers. 
• Emerging Asia: While the region's export cycle surged even higher in September, the question remains whether the strength in tech exports will trickle down more broadly to the non-tech segments of the economy. Our Research analysts' base case is for a BNM hike but this is a close call.  
• EEMEA: Elections in Israel and Serbia delivered surprises. Next week, South Africa goes to the polls too. Our Research analysts expect the NBP to remain on hold after softer October CPI, while the CNB is likely to hike by 25bp. Angola's FX flows are likely being stacked away in its China escrow account. 
• Latin America: Lula's surprise comeback in Brazil puts the cabinet and fiscal signals in focus; our Research team now sees the BCB on hold at 13.75%. Colombia's 4.7%-of-GDP Rescue Bill is a step in the right direction, Mexico's budget is on track, Machado's return lifts Venezuela's transition odds, and Argentina's 2027 vote looms.