The outcome of the US elections on Tuesday and the decisions of a Chinese Communist Party congress on Friday will help to determine the economic course ahead for the world’s two largest economies.
Though the headlines have been dominated by the fight between former president Donald Trump and vice-president Kamala Harris, US voters will also be making their choices as to who will represent them in the Senate and the House of Representatives.
In 2020, vice-president Al Gore only conceded the contest on December 13 after the US Supreme Court ruled that George Bush had won the Electoral College votes of Florida, so giving him the majority in the Electoral College with 271 to 266, though Gore had won the popular vote by some half a million.
This time we may have to wait longer as Trump has consistently said that the 2020 election was “stolen”, which resulted in the assault by some of his supporters on January 6 2021 of the Capitol to try to prevent the Electoral College certifying that he had lost.
The current Democratic Party senate majority is likely to swing to the Republican Party, as many seats in Republican-leaning states are up for re-election, while the House of Representatives is more closely contested and could result in the Democratic Party taking it from the Republicans.
Political analysts estimate that there is a more than 50% chance of the new president having to work with at least one chamber “controlled” by the opposition party.
If this takes place, we could have legislative grid lock as neither party wants to concede to the other party’s agenda.
We saw this earlier this year when it came to border control legislation when the Democratic Party proposed reasonable measures, but this was blocked by Trump, who wanted to use immigration as an election weapon.
Pollsters, alternatively, said there could be a Republican trifecta, which means one party wins the presidency and both chambers. Only time will tell how (and if) the new president will change the policy landscape in the US and how this will affect the rest of the world and whether any transfer of power takes place without violence.
The standing committee meeting in China on the other hand will be a harmonious affair, but still of vital importance, as the meeting will decide how large a stimulus package will be launched to revive the Chinese economy.
Locally, the data calendar will be fairly light with government provisional financing data due on Monday, followed by the S&P Global PMI on Tuesday.
Thursday will see the October foreign reserves, August capacity utilisation of large manufacturers and September electricity generation and consumption. The latter will be the first release that will give an indication of third quarter economic growth. In August, generation rose by 6.3% year-on-year (y/y) while consumption grew by 4.2% y/y.
Though the focus internationally will be on the US and Chinese events, several central banks will be holding their meetings as well. The coming week sees scheduled monetary policy meetings in Brazil, Malaysia, Pakistan, Sweden the UK and the US.
The Bank of England, Riksbank and the US Federal Reserve are likely to cut their policy rates by 25 basis points, while the Brazilian central bank is expected to raise its policy rate by 50 basis points. Malaysia and Pakistan should keep their policy rates steady.
There will also be a series of services sector PMIs from several countries, as well as the publication of GDP figures for the Philippines and Indonesia.
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