Daily Financial Breakfast 4 November 2026: Democrats Secure Congress as Iran’s IRGC Reports Destruction of Four Tankers

Market News Today: What Are the Key Implications?

• President Donald Trump’s domestic agenda faces constraints following Democratic gains in both chambers of the U.S. Congress, where the party secured majorities, according to ING economists.
• Four oil tankers were destroyed by naval mines south of the Strait of Hormuz, according to a statement from Iran’s Islamic Revolutionary Guard Corps reported by Reuters.
• Further tightening drew a more cautious signal from the Reserve Bank of Australia after a 6–3 vote lifted the cash rate by 25 basis points to 4.85%.
• Alongside a roughly RMB100 billion liquidity injection through a one-year swap, the People’s Bank of China announced plans to lift the foreign-exchange reserve requirement ratio to 6% from 4%.
• A December rate increase was very likely to be necessary, ECB Governing Council member Joachim Nagel said, as October headline inflation in the euro area climbed to 4.0%.
• Further rate increases next year remain likely if Sweden’s inflation and economic outlook holds, the Riksbank said after lifting its policy rate to 2.00%.
• With the Middle East war prolonging elevated energy prices, additional rate increases may be required, Bank of Canada Governor Tiff Macklem said.
• A legal challenge involving Cboe, Citadel Securities and the Healthy Markets Association accompanied CFTC approval of single-stock perpetual futures, which fall under joint SEC and CFTC oversight.
• Copper slipped below $14,000 per ton as Chile’s copper commission revised its 2026 production forecast down to 4.94 million tons, implying an 8.4% decline.

How Are Markets Responding?

Where Are Currency Pairs Trading?

Dollar weakness marked Wednesday’s Asian session as U.S. election results came through. After slipping through 101.50, the U.S. Dollar Index hovered near 101.25, its weakest reading since late September. An early Asian rise took EUR/USD to about 1.1240, followed by a move towards four-week highs; GBP/USD also strengthened towards 1.3500. AUD/USD had rebounded on Tuesday to roughly 0.6990 after touching a post-RBA two-week low of 0.6961, though it remained 0.10% lower for the day.

What Lifted Gold Above $4,000?

A softer U.S. dollar accompanied the Democratic victory in Congress, with gold recovering above $4,000 on Wednesday. At around $4,041, the metal was trading 3% higher on the day.

How Are Oil and Gas Prices Moving?

Uncertainty over U.S.–Iran peace negotiations formed the backdrop to WTI crude’s retreat on Wednesday. From around $96.10 per barrel in Asian trading, prices slipped to approximately $95.00 during the European session. Separately, following an earlier decline, European TTF gas prices were back towards €100 per MWh on Tuesday, according to Commerzbank.

How Do U.S. Elections Affect & Fiscal Policy?

What Does Democratic Control of Congress Mean After the U.S. Midterms?

Divided government will mark the remaining two years of President Donald Trump’s term after Democrats captured Senate and House of Representatives majorities in Tuesday’s U.S. midterm elections. ING economists characterised the outcome as a decisive Democratic victory with the bulk of ballots counted.

Gridlock over taxation, spending and other domestic legislation would limit Trump’s domestic agenda under Democratic control of Congress, ING said. Even with less scope for additional fiscal expansion, the economists cautioned that large budget deficits and worsening debt dynamics would remain concerns. They also pointed to the debt ceiling as a possible short-term restriction on borrowing.

What Do Geopolitical Risks Mean for & Energy Security?

What Has Iran’s IRGC Claimed About Four Tankers Near Hormuz?

Reuters reported a Wednesday claim by Iran’s Islamic Revolutionary Guard Corps that naval mines had destroyed four oil tankers attempting to use a route south of the Strait of Hormuz. According to the IRGC, the route was prohibited. The report of the tankers’ destruction reflected the Iranian force’s claim.

How Are Central Banks Responding to & Inflation?

Does the RBA’s Divided 4.85% Decision Point to a Pause?

A 25-basis-point cash-rate increase to 4.85% won the support of six Reserve Bank of Australia board members, while three preferred to leave rates unchanged. Rising unemployment and a weak housing market underpinned the dissenting votes, according to Commerzbank economists Charlie Lay and Dr. Henry Hao. Keeping policy options open, RBA Governor Bullock indicated that a pause could give the bank time to evaluate fresh data.

Under the RBA’s revised, higher inflation forecasts, headline and underlying inflation would both stay above 3% until the end of 2027. Not until mid-2028 did the projections show inflation returning to the midpoint of the 2–3% target. Inflation persistence and the possibility of higher inflation expectations taking hold continued to concern the bank.

Only 8 basis points of tightening by February 2027 were reflected in overnight-indexed swap pricing, Commerzbank said. The same pricing put the likelihood of a further 25-basis-point increase in December at 10% and factored in a 9-basis-point rate cut by September 2027.

Why Is the PBoC Adding RMB100 Billion While Raising FX Reserves?

Roughly RMB100 billion, equivalent to $15 billion, was added to the financial system through a one-year swap conducted by the People’s Bank of China, according to Societe Generale. Discussions with the National Financial Regulatory Administration and the China Securities Regulatory Commission preceded the operation.

To check excessive one-way appreciation of the yuan, the PBoC announced a rise in the foreign-exchange reserve requirement ratio to 6% from 4%, taking effect on 15 November. An extra $24 billion of dollar liquidity would be absorbed, based on Reuters calculations. Meanwhile, the yuan’s 13-day sequence of gains, the longest in three decades, ended.

Sentiment had remained weak despite state-backed share purchases in July and administrative efforts to discourage selling in October. The latest measures came after the CSI 300 lost 8.3% in October, its poorest monthly showing in more than a decade. Weak household spending, difficulties in the property sector and questions about the durability of AI-related earnings growth were among the concerns cited by Societe Generale.

By raising the reserve ratio, the PBoC is reversing the reduction introduced in September 2023 to counter rapid yuan depreciation and capital outflows.

Does 4.0% Inflation Strengthen the Case for a December ECB Increase?

Against renewed euro-area inflation pressures, Bundesbank President and ECB Governing Council member Joachim Nagel said on Tuesday that a December ECB rate increase “is very likely to be necessary.”

At twice the ECB’s target, the October flash headline inflation reading of 4.0% matched consensus, Nordea said. It had climbed from 3.8% in September. Around half of headline inflation came from energy, where prices rose 20.8% year on year, while food inflation recovered to 1.6% from unusually subdued third-quarter readings.

Consensus was also met by core inflation, which held steady at 2.5%. A modest acceleration took non-energy industrial goods inflation to 1.2%, as services inflation nudged up to 3.3%. Despite increases in transport-services inflation across several countries, Nordea found very limited evidence of more widespread second-round effects within services.

Will the Riksbank Tighten Further After Taking Rates to 2.00%?

Further increases in the year ahead remain likely if the outlook for inflation and economic activity holds, Sweden’s Riksbank said as it lifted the policy rate to 2.00%. That guidance was consistent with the central bank’s September policy-rate forecast.

Elevated energy prices, resilient GDP growth and an acceleration in CPIF inflation excluding temporary fiscal measures were highlighted in research by Nomura. The team noted a gradual rise through 2027 in the September policy-rate projection, culminating at 2.43% in the first quarter of 2028. There was no change to the Riksbank’s estimated neutral policy-rate range of 1.50–3.00%.

Nomura also flagged Sweden’s April 2026 halving of food VAT as relevant to the inflation trajectory that followed, given its temporary effect on annual inflation comparisons.

Could Energy Costs Require Further BoC Rate Increases?

Elevated energy costs remained central to the Bank of Canada’s inflation concerns in Governor Tiff Macklem’s testimony to the House of Commons Standing Committee on Finance on Tuesday. He said “further rate hikes may be needed”, with the Middle East war holding energy prices “higher for longer.”

Despite those remarks, oil-price swings on Tuesday saw the Canadian dollar give up its earlier advance against the U.S. dollar.

What Is Changing in Financial Regulation?

Why Is CFTC Approval of Single-Stock Perpetual Futures Being Challenged?

Registered contract markets that are also recognised by the Securities and Exchange Commission can begin trading perpetual futures linked to individual equity securities, 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. This puts them within the joint oversight of the CFTC and SEC. A lawsuit contesting approval of the single-stock perpetuals was joined by Cboe, Citadel Securities and the Healthy Markets Association.

What Is Driving Industrial Commodities?

Why Has Chile Lowered Its Copper Output Forecast to 4.94 Million Tons?

An 8.4% fall in 2026 copper production is now forecast by Chile’s state copper commission Cochilco, which lowered its output estimate to 4.94 million tons from an earlier projection of a marginal 0.6% contraction. Disappointing output had pushed third-quarter production in the world’s largest copper-producing country to a two-decade low, Commerzbank said.

For 2027, Cochilco now expects output of just under 5.1 million tons, a 3% recovery, rather than its previous estimate of 5.55 million tons. Meanwhile, October U.S. copper imports stayed robust at 207,000 tons, Commerzbank said, citing IHS Markit data.

Nevertheless, Tuesday brought a seven-week low for copper as prices slipped below $14,000 per ton. Commerzbank attributed the fall to wider risk aversion surrounding technology stocks.

Which Key Events Are Coming Up?

• What Will the Bank of England Decide on Interest Rates? (5 November 2026): With Bank Rate currently at 3.75%, the Bank of England is due to announce its policy decision on Thursday.
• When Is the U.S. Employment Report Due? (6 November 2026): Friday is the scheduled release date for the United States employment report.
• When Will Canada Release Its Employment Report? (6 November 2026): The Canadian employment report is due for release on Friday.