November was largely dominated by the US election. In the end it wasn’t the cliff hanger the market feared, it was also heavily protected by option buying. Therefore, the aftermath was relatively sanguine. Yields and inflation expectations surged post-election on expected higher growth and inflation prospects as markets priced in a republican clean sweep. Trump’s proposal of Scott Bessent as US Treasury Secretary went a long way to calm the nerves (after selection of more radical names for other WH posts), inflation and nominal yields then rallied into month end.
In Europe, an increasingly fragile French government is in danger of collapsing as a calendar countdown forces compromise to PM Bernier’s budget or a vote of no confidence by either the right or left factions. French 10yr OAT Bund spread moved 13bp wider at one point to finish at 80.25 (+7bp) on the month and at a similar level to the Greece 10yr.
G10 Central banks continued to be active with the Swedish Riksbank accelerating cuts to 50bps along with repeat 50 by the RBNZ. Elsewhere the Fed and BoE both scaled back to 25bp moves after previous 50s.
The US 10y closed the month 10bps lower and 5s-30s swap was 2bps flatter.
