Risk off tone to end the week

For the week ending 30 October 2026

As of midday Friday, global equities were little changed on the week, though trade was choppy, as smaller and value-oriented stocks outperformed megacaps amid concerns that growth in the hyperscalers core businesses is slowing at a time when AI investments have yet to fully bear fruit. The yield on the U.S. 10-year Treasury note fell five basis points this week to 4.94%, while the price of a barrel of West Texas Intermediate crude rose US$3 to US$104.20. Volatility, as measured by futures contracts on the Cboe Volatility Index (VIX), fell to 19.3 from 19.9 last Friday. 

 

MACRO NEWS

Fed leaves rates unchanged, offers little guidance

The Federal Reserve held its policy rate in the range of 3.75% to 4%. The Fed described economic activity as expanding at a strong pace and said job gains had kept pace with labour-force growth. Inflation remained elevated. Policymakers said additional information would help determine the next move. Cleveland Fed President Beth Hammack and Governor Lisa Cook dissented in favour of a rate increase.

Fed Chair Kevin Warsh expressed confidence in the economic outlook, citing strong productivity and robust capital investment. He said the Fed remained committed to its 2% inflation target and would not prejudge future meetings. He also said recent tightening in financial conditions showed that policy was beginning to work and said he remains opposed to forward guidance “outside a crisis.”

Warsh also announced that the Fed will phase in an adjusted FOMC meeting schedule next year. While there will still be eight meetings a year, one meeting, beginning next fall, will be devoted to broad monetary policy strategy. Beginning in 2028, two of the eight meetings will be devoted to strategy.

Iran diplomacy continues as the U.S. weighs renewed attacks

Tensions between Iran and the United States remained high as regional mediators worked to prevent another round of fighting. U.S. officials reportedly told several Gulf countries to prepare for the possibility of a short military campaign after the midterm elections. The U.S. and Israel were also said to be coordinating ahead of any potential attack. U.S. President Donald Trump was briefed by top Pentagon officials on Iran attack options on Thursday, the Wall Street Journal reported.

Diplomatic efforts continued alongside the military preparations. Qatari mediators presented Iran with a draft agreement, and officials discussed a possible meeting in Turkey before November 4. The proposal reportedly included reopening the Strait of Hormuz, lifting the U.S. naval blockade of Iranian ports and allowing international inspectors to visit damaged nuclear facilities. Iran could receive limited sanctions relief and access to frozen funds in return. Iranian officials said they remained open to diplomacy but continued to insist on conditions for formal peace talks. Adding urgency to the talks was a letter from U.S. Vice President JD Vance to Iranian security chief Mohsen Rezaei in an attempt to find enough common ground to revive peace talks. Qatari mediators reportedly returned to Tehran on Friday in pursuit of compromise.

The ECB holds rates as energy risks cloud the outlook

The European Central Bank left its policy rate unchanged at 2.5%. The bank said tighter financial conditions and the energy shock could push inflation higher, though it was not seeing material second-round inflation effects. ECB President Christine Lagarde said the bank was well positioned to navigate elevated uncertainty.

The ECB also announced that Lagarde will step down on February 7, nine months before the end of her term. Her successor will be selected by the European Council. Lagarde said she is leaving early to have freedom to speak on politics, saying she doesn’t think she can remain neutral over the developments in France. After her departure, Lagarde is widely expected to take the helm of the World Economic Forum.

On Friday, the Bank of Japan joined the Fed and ECB in holding rates steady.

U.K. budget raises taxes to fund modest spending increases

The first budget put forward by the government of British Prime Minister Andy Burnham, offered few major surprises. The government raised taxes on banks and gambling companies to fund modest spending increases, but the increases were smaller than markets had feared. The measured approach may disappoint members of Prime Minister Andy Burnham’s party who favour a more active role for government, but were welcomed by markets. Burnham also ruled out a snap election during the next 12 months.

QUICK HITS

• The U.S. economy grew at a faster than expected annualized pace of 3.4% in the third quarter, up from 2.2% in the second quarter. Consumer spending rose 3.8%, while capital spending increased 12.7%. Real private sales to domestic private purchasers, a core measure of GDP growth, jumped at a 4.6% annual rate.
• U.S. core personal consumption expenditures inflation rose 0.3% in September, and 3.1% from a year earlier. These were uncomfortably hot, but not unexpected, levels.
• French government bond spreads narrowed this week after Moody’s maintained France’s Aa3 credit rating. The agency kept its negative outlook. Reacting to student protests, the government announced new teaching positions, expanded university admissions, and billions of euros in loans for school renovations.
• Brazilian equities fell 13.9% on Monday after President Luiz Inácio Lula da Silva was unexpectedly reelected after trailing in the first round of voting. However, Brazil’s Congress shifted further to the right, complicating Lula’s political position.
• White House economic adviser Kevin Hassett said U.S.-Canada trade talks had gained momentum. Reuters reported that the two countries were working on a deal to ease steel and auto tariffs.
• U.S. durable goods orders rose 1.8% in September, the largest increase in five months. Nondefense capital goods orders excluding aircraft rose 0.5%.
• The S&P CoreLogic Case-Shiller national home price index rose 2.09% from a year earlier in August.
• New home sales fell 0.6% in September, a smaller decline than expected.
• This week, French politician Marine Le Pen launched her 2027 presidential campaign with a focus on order, security, and national renewal.
• The Conference Board consumer confidence index rose to 91.7 from an upwardly revised 84.2.
• The U.S. trade deficit widened to $134.9 billion in September from US$132.1 billion in August. Higher capital goods imports linked to AI investment contributed to the increase.
• Fitch said inflation had broadened more clearly in the U.S. than in other advanced economies, raising the risk that price pressures could persist.
• The eurozone economy expanded 1.3% year over year in Q3, despite headwinds from high energy prices.
• U.S. investment grade corporate bond issuance reached an annual record of US$1.76 trillion with more than two months remaining in the year. Financial firms, companies, and governments raised about US$6.61 trillion through broadly syndicated investment grade and high-yield bond sales this year, 15% more than during the same period in 2025.
• Anthropic is expected to go public the week of November 16. Its prospectus warns of catastrophic, existential risks to humanity from advanced AI.
• South Korea’s economy grew 3.4% from a year earlier in the third quarter as AI-related chip demand supported exports and investment.
• The Bank of Canada raised its policy rate by 0.25 percentage point to 2.5% and said additional increases may be needed, but that it would proceed carefully.
• Finland’s president said the U.S. and Ukraine had asked Finland and Norway to play a more active role in efforts to end the war. Russian President Vladimir Putin welcomed the outreach from Finnish President Alexander Stubb and Norwegian Prime Minister Jonas Gahr Støre in a phone call this week, saying Moscow supports efforts to restore ties with Europe after years of confrontation over the war in Ukraine.
• North Korean hackers have reportedly hacked crypto exchange Binance and stole a record US$6.4 billion.
• Neither Prime Minister Benjamin Netanyahu’s coalition nor the opposition bloc led by Gadi Eisenkot, secured a parliamentary majority in Tuesday’s election. Netanyahu’s block won 53 seats, short of the 61 needed for a majority, while the opposition secured 48 seats.
• The U.S. and Venezuela were reportedly developing a path toward presidential elections following changes to the country’s Supreme Court and electoral council.

EARNINGS NEWS

With about 60% of the constituents of the S&P 500 Index having reported, blended earnings per share (which combines reported data with estimates for those companies that have yet to report), rose 30% compared with the same quarter last year, according to data from FactSet. Blended sales rose 13.4% over the same period.