The Day Ahead: Voters Head to Polls and FOMC Meeting Gets Underway

Benchmark interest rates are lower and the yield curve is flatter on Tuesday morning as the Federal Reserve begins its two-day monetary policy meeting and mid-term elections take place.

S&P 500 futures are trading 6.50  points higher at 1,189.50 and Dow futures are 56 points up at 11,146.

The 2s/10s curve is 2bps flatter at 226bps wide. The 10yr note is +7/32 at 100-06 yielding 2.603%. The December FNCL 3.5 is +6/32 at 100-05. The December FNCL 4.0 is +5/32 at 102-20.

The US$ index is 0.71% weaker at 77.75. Commodity prices are also generally higher. Light crude oil is up 1.24% at $83.98 per barrel, and gold prices are up 0.61% at $1,358.35 per ounce.

Despite the early climb, trading is expected to be light today as traders await results from the mid-term elections being held today. This creates the potential for increased price volatility.

“The Republicans look to pick up 8 seats in the Senate, which would leave the Democrats ― and the two Independents that caucus with them ― with a 51 to 49 majority,” said economists at BMO Capital Markets. “The Republicans look to easily win a majority in the House of Representations ― they have sufficient seats even before any toss-up districts are taken into account.”

Meanwhile, investors are also awaiting the FOMC decision tomorrow and Friday’s all-important employment report for last month. 

Key Events Today:

10:00  ― The Census Bureau releases Q3 Housing Vacancies and Homeownership data.

• Treasury Auctions:
• 11:30 ― 4-Week Bills