Daily Financial Breakfast 4 November 2026: Congress Goes to Democrats; Four Tankers Destroyed, Says Iran’s IRGC

Today’s Market News: Essential Developments

• Both chambers of the U.S. Congress now have Democratic majorities. ING economists said the outcome would limit President Donald Trump’s domestic agenda.
• Four oil tankers were destroyed by naval mines south of the Strait of Hormuz, Iran’s Islamic Revolutionary Guard Corps said, according to Reuters.
• 4.85% is the Reserve Bank of Australia’s new cash rate following a 25-basis-point increase. The decision passed by 6–3, with the bank indicating a more cautious approach to additional tightening.
• Roughly RMB100 billion was injected through a one-year swap by the People’s Bank of China, which also announced that the foreign-exchange reserve requirement ratio would rise from 4% to 6%.
• 4.0% was the euro area’s headline inflation rate in October. ECB Governing Council member Joachim Nagel said a December rate increase was very likely to be necessary.
• 2.00% is Sweden’s new policy rate after an increase by the Riksbank. Further increases were likely next year, the bank said, provided its inflation and economic outlook held.
• Persistently elevated energy prices caused by the Middle East war may require further rate increases, Bank of Canada Governor Tiff Macklem said.
• Single-stock perpetual futures received CFTC approval under joint SEC and CFTC oversight. Cboe, Citadel Securities and the Healthy Markets Association joined a legal challenge.
• 4.94 million tons is Chile’s revised 2026 copper production forecast, an 8.4% decline, after a downgrade by its copper commission. Copper prices dropped below $14,000 per ton.

Cross-Asset Market Update

Currency Markets

101.25 was the approximate level of the U.S. Dollar Index during Wednesday’s Asian session. Having broken below 101.50, the index reached its weakest level since late September as U.S. election results came in. Early Asian trading took EUR/USD to around 1.1240 before it moved towards four-week highs; GBP/USD climbed towards 1.3500. Tuesday saw AUD/USD rebound to around 0.6990 from its post-RBA two-week low of 0.6961, leaving it down 0.10% for the day.

Gold Prices

$4,000 was regained by gold on Wednesday. The metal traded around $4,041, a 3% daily gain, alongside a softer U.S. dollar following the Democratic victory in Congress.

Energy Markets

$96.10 per barrel was WTI crude’s approximate level in Wednesday’s Asian session. It subsequently eased to around $95.00 in European trading against a backdrop of uncertainty over U.S.–Iran peace negotiations. In a separate assessment on Tuesday, Commerzbank placed European TTF gas prices back towards €100 per MWh after an earlier fall.

U.S. Midterms & Fiscal Outlook

Both Congressional Chambers Turn Democratic in U.S. Midterms

Both the Senate and House of Representatives went to the Democrats in Tuesday’s U.S. midterm elections. The majorities create a divided government for the final two years of President Donald Trump’s term. With the bulk of votes counted, the outcome amounted to a decisive Democratic victory, according to ING economists.

Tax, spending and other domestic legislation would face gridlock under Democratic control of Congress, constraining Trump’s domestic agenda, ING said. Limits on further fiscal expansion would not remove concerns over large budget deficits and worsening debt dynamics, the economists added. They also identified the debt ceiling as a possible temporary constraint on borrowing.

Geopolitical Risks & Energy Supply Security

Four Tankers Destroyed Near Hormuz, Iran’s IRGC Claims

Four oil tankers were destroyed after striking naval mines on Wednesday, Iran’s Islamic Revolutionary Guard Corps said, according to Reuters. The vessels had been attempting to navigate a route south of the Strait of Hormuz that the IRGC described as prohibited. Their reported destruction remained a claim by the Iranian force.

Monetary Policy & Inflation Pressures

4.85% Cash Rate: RBA Delivers Increase on Divided Vote

4.85% is the Reserve Bank of Australia’s cash rate after a 25-basis-point increase. Six board members backed the decision; three favoured no change. Rising unemployment and weakness in housing were cited by the dissenters, according to Commerzbank economists Charlie Lay and Dr. Henry Hao. RBA Governor Bullock indicated that a pause could allow assessment of incoming data while keeping the bank’s policy options open.

Upgraded RBA inflation forecasts put both headline and underlying inflation above 3% until the end of 2027. A return to the midpoint of the 2–3% target was projected only in mid-2028. Persistent inflation and the possibility that higher inflation expectations could become entrenched remained concerns for the bank.

A further 25-basis-point increase in December carried a 10% probability in overnight-indexed swap pricing, Commerzbank said. Markets priced in only 8 basis points of tightening by February 2027, alongside a 9-basis-point rate reduction by September 2027.

RMB100 Billion Injection: PBoC Also Lifts FX Reserve Requirement

Roughly RMB100 billion entered the financial system through a one-year swap operation by the People’s Bank of China, Societe Generale reported. Equivalent to $15 billion, the injection followed discussions with the National Financial Regulatory Administration and the China Securities Regulatory Commission.

To restrain excessive one-way yuan appreciation, the PBoC also announced an increase in the foreign-exchange reserve requirement ratio from 4% to 6%, effective 15 November. The adjustment would absorb an additional $24 billion in dollar liquidity, Reuters calculated. A 13-day run of gains in the yuan, its longest in three decades, came to an end.

An 8.3% fall in the CSI 300 during October preceded the measures, marking the index’s worst month in more than a decade. Societe Generale pointed to subdued household consumption, property-sector problems and doubts over the sustainability of AI-related earnings growth. Neither state-backed equity buying in July nor administrative steps to discourage selling in October had lifted sentiment.

The higher reserve ratio reverses a cut made in September 2023 to counter rapid yuan depreciation and capital outflows.

4.0% Inflation: Nagel Points to December ECB Rate Increase

A December ECB rate increase “is very likely to be necessary.” That was the assessment on Tuesday from Bundesbank President and ECB Governing Council member Joachim Nagel, as inflation pressures re-emerged across the euro area.

At 4.0%, October flash headline inflation was twice the ECB’s target and in line with consensus, Nordea said. The reading increased from September’s 3.8%. A 20.8% year-on-year rise in energy prices contributed around half of headline inflation, while food inflation recovered to 1.6% following unusually low third-quarter readings.

Unchanged core inflation of 2.5% also met consensus. Services inflation ticked higher to 3.3%, and non-energy industrial goods inflation picked up marginally to 1.2%. Although transport-services inflation increased in several countries, Nordea said evidence of wider second-round effects in services was still very limited.

2.00% Policy Rate: Riksbank Keeps Further Increases in View

2.00% is the policy rate following the latest increase by Sweden’s Riksbank. Consistent with its September policy-rate forecast, the central bank said more increases were likely in the coming year if its inflation and economic activity outlook held.

Faster CPIF inflation excluding temporary fiscal measures, resilient GDP growth and high energy prices were highlighted by Nomura’s research team. Nomura noted that the September policy-rate projection climbed gradually through 2027, reaching a peak of 2.43% in the first quarter of 2028. The Riksbank left its estimated neutral policy-rate range at 1.50–3.00%.

A halving of Swedish food VAT in April 2026 temporarily affects annual inflation comparisons. Nomura identified this as a relevant factor in the subsequent inflation path.

BoC’s Macklem Flags Possible Additional Rate Increases

“further rate hikes may be needed” was Bank of Canada Governor Tiff Macklem’s warning to the House of Commons Standing Committee on Finance on Tuesday. He said the Middle East war was leaving energy prices “higher for longer.” The testimony tied the bank’s ongoing inflation concerns to elevated energy costs.

Despite those remarks, Tuesday’s oil-price fluctuations accompanied a reversal of the Canadian dollar’s earlier gains against the U.S. dollar.

Regulatory Developments

Single-Stock Perpetual Futures Gain CFTC Approval, Face Lawsuit

Perpetual futures linked to individual equity securities could start trading on registered contract markets also recognised by the Securities and Exchange Commission, the Commodity Futures Trading Commission said on Tuesday.

Under the existing regulatory framework, the contracts had been deemed approved as security futures products, CFTC Chairman Michael Selig said. That classification subjects them to joint CFTC and SEC oversight. A lawsuit contesting the approval of single-stock perpetuals was joined by Cboe, Citadel Securities and the Healthy Markets Association.

Industrial Metals

4.94 Million Tons: Chile Lowers Copper Production Forecast

4.94 million tons is Chile’s revised 2026 copper production forecast. State copper commission Cochilco now projects an 8.4% decline rather than the marginal 0.6% contraction previously expected. Disappointing output pushed third-quarter production in the world’s largest copper-producing country to a two-decade low, Commerzbank said.

For 2027, Cochilco reduced its forecast from 5.55 million tons to just under 5.1 million tons, a 3% recovery. Meanwhile, U.S. copper imports stayed strong at 207,000 tons in October, according to IHS Markit data cited by Commerzbank.

Despite that import strength, copper slipped below $14,000 per ton on Tuesday, reaching a seven-week low. Broader risk aversion around technology stocks drove the decline, according to Commerzbank.

Key Events Ahead

• Bank of England Rate Announcement (5 November 2026): With the current Bank Rate at 3.75%, the Bank of England is due to deliver its policy decision on Thursday.
• U.S. Labour Market Report (6 November 2026): Friday is the scheduled release date for the United States employment report.
• Canada Labour Market Report (6 November 2026): Canada’s employment report is due for publication on Friday.