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Hi everyone,
The counting is not fully done, but the big answer is in. Democrats have won control of both the House and the Senate, and markets spent Wednesday first falling, then climbing hard once the size of the win became clear.
Quick take: The Associated Press has called both chambers for Democrats after seven Senate seats flipped. Stocks ended Wednesday sharply higher, the 10 year Treasury yield fell to 4.89%, and Bitcoin recovered from below $76,000 to above $80,000. Now everything turns to Friday's jobs report.
The House flipped, and it was not close
The AP called the House for Democrats in the early hours of Wednesday. Their count showed 234 seats already won by Democrats, well past the 218 needed, with a few dozen races still being counted.
Republicans went into this election holding the House. They leave it as the minority party. Hakeem Jeffries is set to become Speaker when the new Congress starts on January 3, 2027.
For ordinary people like me, the hope from whoever wins is simple: more workplaces and more jobs. People want inflation and the price of daily goods to come down, and they want wages to go up. People also hope to see fewer wars, and everyone will be watching the role America plays in the world.
The Senate went the same way, with two races still open
The Senate took a little longer, but it landed in the same place. The AP called the chamber for Democrats on Tuesday night, after a win in Iowa pushed them past the 51 seats needed.
In total, seven Republican held seats flipped: Texas, North Carolina, South Carolina, Ohio, Kansas, Iowa and Maine. In Maine, Susan Collins lost after almost thirty years in the Senate. In Texas, James Talarico became the state's first Democratic senator since 1988. Republicans did not flip a single Democratic seat.
Two races are still not settled. In Alaska, Dan Sullivan and Mary Peltola are neck and neck, and the ranked choice count only starts on November 18. In Mississippi, Democrat Scott Colom led Senator Cindy Hyde-Smith by just 43 votes with thousands of ballots still to review. These two races decide the final size of the majority, not who holds it.
Markets hated it for one night, then loved it
While results came in on Tuesday night, stock futures fell hard. By Wednesday's close, the picture had fully flipped. The Dow jumped about 3%, a gain of almost 1,600 points. The S&P 500 rose 1.6% and the Nasdaq rose 1.4%.
Bond buyers moved the other way. The 10 year Treasury yield fell to 4.89%, down from 4.97% a day earlier, as investors bet that a Democratic Congress will limit new tax and spending plans and slow down government borrowing.
The dollar fell against every major currency. Gold jumped 3.3% to $4,070 an ounce. Bitcoin dropped below $76,000 during the night, then climbed back above $80,000 by Wednesday, as the fear around crypto laws eased a little.
Qualcomm showed the other side of the chip story
Wednesday also brought earnings. Qualcomm beat forecasts, with adjusted earnings of $2.17 a share and revenue of about $10.4 billion. But the detail worried investors. Sales of phone chips fell 26% from a year ago to $5.14 billion, while car chip sales jumped 89% to $1.99 billion.
Its guidance for the current quarter came in a bit soft, and the shares fell around 5% in after hours trading. The message matches the whole week: the AI and car side of tech is strong, the phone side is not.
London decides today, and it matters beyond Britain
Today, Thursday, the Bank of England gives its rate decision. Its rate sits at 3.75%, and markets put the chance of a rise to 4.00% at about 90%. That would be its first hike since August 2023. UK inflation rose to 3.5% in September, and three of its nine voters already wanted a hike at the last meeting.
Why should American readers care? Because borrowing costs are a global story now. If London hikes today and the Fed hikes in December, money gets more expensive on both sides of the Atlantic at the same time, and that pressure reaches stocks, the dollar and crypto together.
Friday brings the jobs number
The last big test of the week lands on Friday, November 6, at 8:30 a.m. Eastern, when the October jobs report comes out.
Forecasts sit between about 55,000 and 65,000 new jobs, after a weak 29,000 in September. Unemployment is expected to stay at 4.2%. Traders now put the chance of a Fed rate hike on December 9 at close to 80%, up from about 70% at the end of last week.
A strong number, say above 100,000, would make that hike look almost certain. A weak one would reopen the whole argument inside the Fed, the same argument I wrote about in my first post.
My bottom line
This week gave us the politics first and the economics second. The election changed who controls Congress, and markets decided they could live with it. But the Fed story is not finished, and Friday's report is the piece that decides whether December brings another hike.
I am watching two things now: how big the final Senate majority gets, and whether Friday's jobs number lands near 60,000 or surprises everyone.
Which one do you think matters more for your money, the new Congress in Washington or Friday's jobs number?
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