Daily Financial Breakfast 4 November 2026: Democrats Win Congress While Iran’s IRGC Says Four Tankers Destroyed

Market News Today: Key Takeaways

• Democrats secured majorities in both chambers of the U.S. Congress, with ING economists saying the result would constrain President Donald Trump’s domestic agenda.
• Iran’s Islamic Revolutionary Guard Corps said four oil tankers were destroyed after striking naval mines south of the Strait of Hormuz, Reuters reported.
• The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.85% in a 6–3 vote, while signalling greater caution about further tightening.
• The People’s Bank of China injected roughly RMB100 billion through a one-year swap and announced an increase in the foreign-exchange reserve requirement ratio from 4% to 6%.
• Euro-area headline inflation rose to 4.0% in October, while ECB Governing Council member Joachim Nagel said a December rate increase was very likely to be necessary.
• Sweden’s Riksbank raised its policy rate to 2.00% and said further increases were likely next year if its inflation and economic outlook held.
• Bank of Canada Governor Tiff Macklem said further rate increases may be needed as the Middle East war keeps energy prices higher for longer.
• The CFTC approved single-stock perpetual futures under joint SEC and CFTC oversight, while Cboe, Citadel Securities and the Healthy Markets Association joined a legal challenge.
• Chile’s copper commission cut its 2026 production forecast to 4.94 million tons, an 8.4% decline, as copper prices fell below $14,000 per ton.

Market Developments

Foreign Exchange

The U.S. Dollar Index fell below 101.50 and traded near 101.25 during Wednesday’s Asian session, reaching its lowest level since late September as U.S. election results emerged. EUR/USD rose to around 1.1240 in early Asian trading and later approached four-week highs, while GBP/USD advanced toward 1.3500. On Tuesday, AUD/USD recovered from a post-RBA two-week low of 0.6961 to around 0.6990, still down 0.10% on the day.

Gold

Gold reclaimed $4,000 on Wednesday and traded around $4,041, up 3% on the day, as the Democratic congressional victory accompanied a weaker U.S. dollar.

Energy

WTI crude traded around $96.10 per barrel during Wednesday’s Asian session before retreating to around $95.00 during European hours. The moves came amid uncertainty surrounding U.S.–Iran peace negotiations. Separately, Commerzbank put European TTF gas prices back toward €100 per MWh on Tuesday following an earlier decline.

U.S. Elections & Fiscal Policy

Democrats Secure Both Chambers of Congress in U.S. Midterms

Democrats won majorities in the Senate and House of Representatives in Tuesday’s U.S. midterm elections, establishing a divided government for the final two years of President Donald Trump’s term. With most votes counted, ING economists described the result as a decisive Democratic victory.

ING said Democratic control of Congress would constrain Trump’s domestic agenda, with tax, spending and other domestic legislation facing gridlock. The economists said large budget deficits and deteriorating debt dynamics would remain concerns despite the constraints on further fiscal expansion, and identified the debt ceiling as a potential temporary brake on borrowing.

Geopolitics & Energy Security

Iran’s IRGC Says Four Tankers Hit Naval Mines Near Hormuz

Iran’s Islamic Revolutionary Guard Corps said on Wednesday that four oil tankers were destroyed after hitting naval mines while attempting to cross a route south of the Strait of Hormuz, Reuters reported. The IRGC described the route as prohibited; the account of the vessels’ destruction was a claim by the Iranian force.

Central Banks & Inflation

RBA Raises Cash Rate to 4.85% in Split Vote

The Reserve Bank of Australia increased its cash rate by 25 basis points to 4.85%, with six board members supporting the move and three voting to hold. Commerzbank economists Charlie Lay and Dr. Henry Hao said the dissenters cited rising unemployment and housing weakness. RBA Governor Bullock signalled a possible pause to assess incoming data while preserving the bank’s policy options.

The RBA raised its inflation forecasts, projecting both headline and underlying inflation above 3% until the end of 2027 and a return to the midpoint of its 2–3% target only in mid-2028. The bank remained concerned about persistent inflation and the risk of higher inflation expectations becoming entrenched.

Commerzbank said overnight-indexed swap pricing assigned a 10% probability to another 25-basis-point increase in December and incorporated just 8 basis points of tightening by February 2027. Pricing also incorporated a 9-basis-point rate reduction by September 2027.

PBoC Injects RMB100 Billion and Raises FX Reserve Requirement

The People’s Bank of China conducted a one-year swap operation injecting roughly RMB100 billion, equivalent to $15 billion, into the financial system, Societe Generale reported. The operation followed discussions with the National Financial Regulatory Administration and the China Securities Regulatory Commission.

The PBoC also announced that the foreign-exchange reserve requirement ratio would increase from 4% to 6%, effective 15 November, to curb excessive one-way yuan appreciation. Reuters calculations put the additional dollar liquidity absorbed by the change at $24 billion. The yuan ended a 13-day winning streak, its longest in three decades.

The measures followed an 8.3% October decline in the CSI 300, its worst monthly performance in more than a decade. Societe Generale cited weak household consumption, property-sector difficulties and concerns about the sustainability of AI-related earnings growth. Earlier state-backed equity purchases in July and administrative measures discouraging selling in October had failed to improve sentiment.

The reserve-ratio increase reverses a September 2023 reduction that had been intended to stem rapid yuan depreciation and capital outflows.

Nagel Signals December ECB Increase as Inflation Reaches 4.0%

Bundesbank President and ECB Governing Council member Joachim Nagel said on Tuesday that an ECB rate increase in December “is very likely to be necessary.” His remarks accompanied renewed inflation pressure across the euro area.

October flash headline inflation rose to 4.0% from 3.8% in September, matching consensus and reaching twice the ECB’s target, Nordea said. Energy prices increased 20.8% year on year and accounted for around half of headline inflation. Food inflation rebounded to 1.6% after unusually low readings in the third quarter.

Core inflation remained at 2.5%, also matching consensus. Services inflation edged up to 3.3%, while non-energy industrial goods inflation accelerated slightly to 1.2%. Nordea said several countries recorded higher transport-services inflation, but evidence of broader second-round effects in services remained very limited.

Riksbank Raises Policy Rate to 2.00% and Retains Tightening Guidance

Sweden’s Riksbank raised its policy rate to 2.00%. The central bank said further increases were likely in the coming year if its outlook for inflation and economic activity held, in line with its September policy-rate forecast.

Nomura’s research team highlighted accelerating CPIF inflation after excluding temporary fiscal measures, resilient GDP growth and elevated energy prices. Its review noted that the September policy-rate projection rose gradually through 2027 to a peak of 2.43% in the first quarter of 2028. The Riksbank’s estimate of the neutral policy-rate range remained 1.50–3.00%.

Sweden halved food VAT in April 2026, a temporary influence on annual inflation comparisons that Nomura identified as relevant to the subsequent inflation path.

Macklem Says Further BoC Rate Increases May Be Needed

Bank of Canada Governor Tiff Macklem told the House of Commons Standing Committee on Finance on Tuesday that “further rate hikes may be needed” because the Middle East war was keeping energy prices “higher for longer.” His testimony linked the bank’s continuing inflation concerns to elevated energy costs.

The Canadian dollar surrendered earlier gains against the U.S. dollar on Tuesday amid swings in oil prices, despite Macklem’s comments.

Financial Regulation

CFTC Approves Single-Stock Perpetual Futures as Legal Challenge Emerges

The Commodity Futures Trading Commission said on Tuesday that perpetual futures tied to individual equity securities could begin trading on registered contract markets also recognised by the Securities and Exchange Commission.

CFTC Chairman Michael Selig said the contracts had been deemed approved as security futures products under the existing regulatory framework, placing them under joint CFTC and SEC oversight. Cboe, Citadel Securities and the Healthy Markets Association joined a lawsuit challenging the approval of single-stock perpetuals.

Industrial Commodities

Chile Cuts Copper Output Forecast to 4.94 Million Tons

Chile’s state copper commission Cochilco cut its 2026 production forecast to 4.94 million tons, an 8.4% decline, from a previous projection for a marginal 0.6% contraction. Commerzbank said disappointing output had left third-quarter production in the world’s largest copper-producing country at a two-decade low.

Cochilco also lowered its 2027 forecast to just under 5.1 million tons, representing a 3% recovery, from an earlier estimate of 5.55 million tons. U.S. copper imports remained strong at 207,000 tons in October, according to IHS Markit figures cited by Commerzbank.

Copper nevertheless fell below $14,000 per ton to a seven-week low on Tuesday. Commerzbank linked the decline to broader risk aversion surrounding technology stocks.

Upcoming Key Events

• Bank of England Interest-Rate Decision (5 November 2026): The Bank of England is scheduled to announce its policy decision on Thursday; the current Bank Rate is 3.75%.
• U.S. Employment Report (6 November 2026): The United States is scheduled to release its employment report on Friday.
• Canadian Employment Report (6 November 2026): Canada is scheduled to release its employment report on Friday.