The Reserve Bank of Australia (RBA) maintained its cash rate at 4.35% on Tuesday, a 13-year high, opting for a steady approach as global attention remains fixed on the US election results.

This decision marks a full year at this elevated rate.

The RBA acknowledged the “high level of uncertainty” surrounding the international outlook, while emphasizing its commitment to tackling persistent inflation.

In its official statement, the rate-setting board declared underlying inflation “remains too high,” and projected a continued period before inflation sustainably returns to the target range.

This necessitates ongoing vigilance towards upside inflation risks, with the board explicitly stating it is “not ruling anything in or out” regarding future policy adjustments.

Following the announcement, the Australian dollar and three-year sovereign bond yields held their gains, suggesting market confidence in the RBA’s current stance.

Governor Michele Bullock, echoing previous statements, reiterated the board’s position that a rate cut is not yet warranted, emphasizing the need for clear evidence of sustainable inflation control within the target band.

While Australia’s core CPI has retreated from its 2022 peak, the current 3.5% rate remains elevated, with services inflation still robust.

The RBA’s latest forecasts anticipate core inflation reaching the 2-3% target band by mid-to-late 2025, a slightly earlier timeline than its August projections.

Governor Bullock affirmed the RBA’s readiness to adjust policy based on incoming data, particularly if consumption weakens significantly.

Market expectations for an easing cycle have shifted to May 2025, compared to February previously.

Charu Chanana, chief investment strategist at Saxo Asia Pacific, told Bloomberg that the RBA’s hawkish stance within the global central banking landscape, particularly its avoidance of signaling rate cuts, has had limited market impact, especially given the anticipation surrounding the US election and potential stimulus measures from China.

Governor Bullock acknowledged these factors influenced the rate decision.

The RBA emphasized that its policy remains “less restrictive” than its international counterparts, even after rate cuts implemented elsewhere.

This distinguishes the RBA from other major central banks, including the Federal Reserve (also meeting this week) and the Reserve Bank of New Zealand, which have already initiated rate reductions to bolster their economies or stimulate growth.

The US election adds another layer of complexity.

Donald Trump’s campaign, focused on protectionist policies including potential trade tariffs on China, could have significant implications for Australia, given China’s status as its largest trading partner.

Governor Bullock, however, deemed it “premature” to speculate on the election’s potential impact on Australia.

Australia’s economic growth has slowed considerably over the past year due to tight monetary policy.

However, a robust labor market, with unemployment at a historic low of 4.1%, provides the RBA with confidence in achieving a soft landing.

Despite the strong labor market supporting demand, economists suggest a disconnect between monetary and fiscal policy is complicating the RBA’s task.

Su-Lin Ong, chief economist at Royal Bank of Canada, points to “hot” public expenditure in Australia, suggesting government consumption levels support only a limited easing cycle in 2025.

Fitch Ratings predicts a shift to a budget deficit for Australia in fiscal year 2025, attributed to tax cuts, cost-of-living support, and declining export prices.

Fitch characterizes Australia’s fiscal policy as “modestly expansionary.”

The RBA has upwardly revised its public demand forecasts from June 2025 through December 2026.

The Australian government has refuted claims that its policies are contributing to inflationary pressures.

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On the eve of the 2024 US presidential election, crypto prediction markets are abuzz with high-stakes bets, positioning Donald Trump narrowly ahead of Kamala Harris.

Platforms like Polymarket and Kalshi, where election betting has soared in popularity, reflect a slight edge for Trump—57% to 43% on Polymarket and a closer 51% to 49% on Kalshi, according to a report by Reuters.

This trend in crypto markets stands in contrast to traditional polling, which still shows a close race, but without a clear leader.

As crypto dollars chase election outcomes, billions are pouring into bets fueled by both speculation and political conviction.

Proponents argue these prediction markets provide a unique barometer of sentiment, with real financial stakes adding credibility that opinion polls may lack.

Elon Musk, an outspoken supporter, remarked that “betting markets are more accurate than polls, as actual money is on the line.”

However, critics argue these markets may be biased, catering primarily to a niche crypto-savvy audience rather than reflecting the broader voter base.

Crypto platforms see massive election bet volumes

Since emerging five years ago, prediction markets like Polymarket and Kalshi have rapidly grown in popularity, particularly around major political events.

Polymarket currently leads in election-related volume, with a staggering $3.1 billion in wagers, making it one of the busiest platforms.

Kalshi, a US-regulated platform overseen by the Commodity Futures Trading Commission (CFTC), has seen $197 million in trades on its presidential outcome contract, with an additional $33.8 million on its electoral college margin contract.

These platforms set prices that reflect perceived probabilities.

For example, on Polymarket, a Trump contract costs around $0.58, while a Harris contract is priced at $0.42, with a winning contract yielding $1.

A Kalshi spokesperson noted that the platform implements trade caps—$7 million for individuals and $100 million for institutions—to prevent any single trader from having excessive influence on the market.

Despite the high volumes, some analysts question whether these platforms truly reflect voter sentiment. Michael Cahill, CEO of Douro Labs, stated,

“Your average voter isn’t spending time or money on prediction markets,” adding that the platforms are dominated by crypto-native users, many of whom favor Trump.

Future uncertain for prediction markets post-election

The surge in political betting has tested the resilience and appeal of prediction markets, though some analysts suggest the headline trading volumes may overstate active interest.

Adam McCarthy, a research analyst at digital market data provider Kaiko, pointed out that Polymarket’s $3.1 billion in trades includes inactive bets from former candidates like Nikki Haley and Robert F. Kennedy Jr.

“That $2 billion cumulative figure looks impressive, but it doesn’t entirely reflect active markets,” McCarthy explained.

However, Polymarket’s October trading volume reached $1.1 billion, marking a record-breaking month.

After the election, these platforms will face the challenge of maintaining relevance.

McCarthy noted that their success will depend on how well they adapt to non-political markets and sustain user engagement.

Regulatory challenges also loom. Polymarket, for instance, restricts US nationals from participating due to regulatory constraints, though a French national reportedly placed a substantial bet on Trump, adding an extra layer of intrigue.

Beyond politics, both Polymarket and Kalshi offer contracts on topics from Federal Reserve decisions to pop culture events, diversifying their offerings in hopes of sustaining activity after the election.

As the U.S. election unfolds, crypto prediction markets are positioned to provide unique insights into real-time sentiment—but whether they can sustain their momentum in a post-election world remains to be seen.

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As the US presidential election approaches, Japan’s markets are closely monitoring the potential impact on the yen and Tokyo stock market.

According to a Bloomberg report, analysts suggest that a Kamala Harris victory could strengthen the yen, while a Donald Trump win might support Japanese stocks but lead to further yen depreciation.

However, the risk of a contested election result leaves Japanese markets bracing for a turbulent period, with heightened volatility likely across key asset classes.

Harris victory seen as support for yen, easing pressure on imports

Should Kamala Harris win, she is expected to maintain continuity in US economic policy, focusing on a gradual reduction in inflation and promoting a stable economic environment.

Such a scenario could lead to the Federal Reserve easing interest rates, a move that may narrow the yield gap between Japan and the US and, consequently, support the yen.

Analysts anticipate that the yen could appreciate under Harris, with Yujiro Goto, head of foreign-exchange strategy at Nomura Securities Co., citing in the Bloomberg report that “the market will react with lower yields and a weaker dollar, and dollar-yen will likely test the 150 level.”

This appreciation would alleviate Japan’s import costs and possibly reduce inflationary pressures on essential goods.

On Tuesday, the yen showed some resilience, reversing a portion of its earlier losses as the dollar-yen exchange rate inched higher by 0.2% to 152.47.

The shift occurred as investors adjusted their expectations around a Republican win.

Japanese stocks, meanwhile, saw a cautious rebound with the broad Topix index rising 0.8% after a prior dip, though the market remains alert to the election’s outcome.

Trump win may drive short-term boost to stocks but deepen yen decline

Conversely, if Donald Trump were to win, his policies favouring tax cuts and deregulation could stimulate the US economy, encouraging dollar demand and favourably impacting Japanese exporters reliant on a robust American market.

In this scenario, the dollar-yen exchange rate could rise further, with Goto suggesting that “if there’s a red sweep, dollar-yen may test a rise above 155.”

Such movement could bring the yen dangerously close to its 38-year low, marked in July, intensifying concerns over Japan’s import costs.

For Japanese stocks, Trump’s return could lead to initial gains, particularly for companies focused on exports.

Masahiko Loo, senior strategist at State Street Global Advisors, notes that “the initial reaction will be a stronger dollar and higher share prices.”

However, Loo cautions that any benefit might be short-lived, especially if Trump revives his stance on imposing tariffs on foreign goods, a move that would likely hurt Japanese manufacturers dependent on American demand.

Tariff threat looms large for Japan’s exports and broader economy

One of the most significant risks of a Trump win would be his potential imposition of new tariffs on major trading partners.

Japan’s economy could take a hit if the US administration levies additional tariffs on Japanese goods.

Trump has floated a policy of placing 10-20% duties on all imports, which would significantly affect Japan’s export-heavy sectors, including automotive, machinery, and electronics.

Such a move would be reminiscent of 2018, when US-China trade tensions escalated under Trump’s tariffs on Chinese goods.

Chisa Kobayashi, a Japan equity strategist at UBS SuMi TRUST Wealth Management, warns that “when Trump imposed tariffs on China in 2018, all Japanese shares came under pressure regardless of their exposure to China.”

If other nations reciprocate with tariffs, Japan’s export market could see sustained losses, slowing economic growth across the board.

Markets prepare for potential election delays and price swings

A final layer of complexity arises from the risk of a delayed or contested US election result.

With Harris and Trump polling closely, the uncertainty could lead to short-term market disruptions.

Analysts expect a period of high volatility as Japanese investors and traders respond to election developments.

Japan’s dollar-yen pair, heavily traded during Asian market hours, could be especially volatile.

According to recent trading data, the one-week implied volatility for the dollar against the yen has risen sharply, reaching levels last seen in August amid heightened speculation over Bank of Japan rate moves.

In such a scenario, Japanese authorities may consider verbal intervention if the dollar-yen rate escalates rapidly, a measure used to calm markets.

Meanwhile, Japanese shares could also see fluctuations influenced by the recent changes in Japan’s domestic political scene, where the ruling coalition’s loss of a majority in the lower house sparked further volatility.

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Amidst soaring housing costs, renovations are increasingly popular, but a new study reveals a troubling financial trend: a majority of homeowners are going into debt for renovations they later regret.

Clever Real Estate’s survey of 1,000 homeowners highlights the prevalence of budget overruns, financial strain, and ultimately, dissatisfaction with the results.

The rising cost of home improvements

With high home prices and mortgage rates discouraging moves, many homeowners are choosing to renovate.

Clever Real Estate found over 60% prefer remodeling to relocating.

This trend is fueling a surge in home improvement spending, with 40% of homeowners planning to invest $10,000 or more in 2025.

However, this ambition often clashes with reality.

Nearly 80% of homeowners exceeded their budget on their last renovation, and a startling two-thirds incurred debt to finance these projects.

This year, 45% of homeowners spent $5,000 or more on renovations, with 36% exceeding $10,000.

Almost half (44%) anticipate spending even more this year compared to last.

The survey reveals that budget overruns are widespread, with more than three-quarters of homeowners experiencing them.

For nearly half of these, overspending amounted to at least $5,000, and 35% exceeded their budget by $10,000 or more.

Faced with these escalating costs, 32% of homeowners halted projects prematurely, while 63% resorted to borrowing, often facing financial consequences like difficulty paying credit card bills (36%).

The allure of DIY and the risk of regret

The survey reveals a strong do-it-yourself ethos, with 94% of homeowners undertaking major renovations and 93% tackling minor ones within the past five years.

Popular major renovations included bathroom remodels (37%), interior painting (33%), and HVAC upgrades (30%).

Cleveland-based real estate agent Geoffrey Hoffman told Associated Press that in markets with older homes, adding central air conditioning offers a strong return on investment while enhancing homeowner comfort.

Common minor renovations included faucet replacements (36%), new light fixtures (35%), and minor kitchen updates (34%).

Paradoxically, some minor renovations offer better value than major ones.

Data suggests minor kitchen remodels recoup approximately 96% of their cost upon resale, while major kitchen remodels typically recoup only 38%.

Similarly, garage door upgrades offer nearly double the return on investment, yet only 19% of homeowners have undertaken this project in recent years.

While 92% of homeowners reported positive impacts from renovations, a significant 74% expressed regrets.

Overspending (24%) and lengthy project timelines (22%) were the most common complaints.

Furthermore, nearly half of renovators preferred their homes before renovations, with younger generations (millennials and Gen Z) significantly more likely to experience regret (82% and 89% respectively) compared to baby boomers (51%).

The DIY dilemma: saving money vs. losing value

The desire to save money drives many homeowners towards DIY projects.

Popular choices include interior painting (62%), light fixture installation (61%), and deck sealing/staining (59%).

A surprising number expressed willingness to tackle complex projects like roof replacements, electrical work, additions, and plumbing upgrades.

However, this cost-saving approach can backfire.

Poorly executed DIY renovations can diminish home value, as Hoffman warns:

New isn’t always better. An older kitchen in good condition is better than a cheaply renovated new kitchen installed with poor workmanship.

He emphasizes that subpar DIY work and questionable design choices are frequently detrimental to home value.

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Oil prices traded flat on Tuesday as traders waited cautiously for the outcome of the US Presidential election later in the day. 

Oil prices had climbed sharply on Monday after the Organization of the Petroleum Exporting Countries and allies extended their voluntary production cuts till the end of December. 

Even as prices had risen over the past couple of sessions, oil remained below its level seen late last year when the war broke out between Israel and Hamas. 

At the time of writing, the price of West Texas Intermediate crude oil on the New York Mercantile Exchange was at $71.44 per barrel, mostly unchanged from the previous close. 

Brent crude oil on the Intercontinental Exchange was also flat at $75.08 per barrel. 

US elections, Fed meeting

As the world waited with bated breath for the outcome of the US elections, there was a bit of a calm in the oil market on Tuesday. 

Oil prices have been volatile over the last month with heightened geopolitical tensions in the Middle East. 

However, the oil market could just be waiting for more cues from the tightly contested election battle between former President Donald Trump and Vice President Kamala Harris. 

Opinion polls show both Harris and Trump are locked in a close contest.

If Harris wins the elections, a status quo can be expected to be maintained on policies concerning the energy markets. 

However, a Trump win could provide more cues to oil prices.

The former President of the US could ease sanctions on Russia and tighten those on Iran. 

Moreover, Trump is also vocal about his support for more drilling of oil and gas in the country.

This could lead to more production of oil from the world’s largest producer. 

Additionally, the oil market will also focus on the US Federal Reserve’s policy meeting later this week.

The Fed is expected to cut interest rates by 25 basis points. 

Lower interest rates bode well for commodities as it increases liquidity in the economy and reduces borrowing costs for the public. 

China NPC meeting in focus

China’s National People’s Congress kicked off a four-day meeting on Monday.

The market expects the political body to introduce more stimulus packages to boost the economy. 

In October, China said it will increase its debt, but failed to provide any cues on the scale of spending, which disappointed the financial markets. 

Recent reports claimed that the country could approve about $1.4 trillion in increased debt over the coming years. 

China is the world’s largest importer of crude oil, and the second-largest consumer after the US Concerns about poor demand from China had weighed on oil prices for the most part of 2024. 

Any concrete stimulus packages from China could support oil prices going forward. 

Price forecasts

Oil prices have risen sharply after OPEC+ extended its production cuts on Sunday. Prices are likely to have support for the time-being. 

“Despite the extension of production cuts, the oil market faces pressure from other significant forces.

Record-high US production is one of the most notable factors contributing to this pressure,” Muhammad Umair, author at Fxempire.com, said in a report. 

According to experts, Brent prices could rise further towards $80 per barrel as the benchmark has already breached the 50-day exponential moving average of $75. 

Christopher Lewis, author at Fxempire, said:

Short-term pullbacks could end up being buying opportunities and those buying opportunities will end up being valuable as far as I can see.

Lewis believes that the market will get further cues from the election results and the Fed meeting outcome. 

“I would say this remains more or less a buy on the dip market, at least in the short term,” Lewis said. 

For WTI, if prices could breach the immediate resistance of $72 per barrel, the US benchmark could rise towards $75 per barrel. 

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