The Bank of Japan (BOJ) kept its ultra-low interest rates unchanged on Thursday, emphasizing the importance of closely monitoring global economic trends, particularly given the risks to Japan’s delicate recovery.

While BOJ officials projected inflation near the 2% target over the next few years, they maintained a cautious stance on future rate increases, stating that any policy adjustments would depend on sustained economic growth.

In its quarterly outlook report, the BOJ underscored the need to observe the economic trajectory of key overseas markets, especially the US, along with financial market developments.

It noted that this focus on external factors is essential in assessing potential impacts on Japan’s economic outlook, price stability, and associated risks.

The BOJ reiterated its position on policy adjustments, affirming its intention to raise rates if Japan’s economic indicators align with expectations.

As anticipated, the BOJ held its short-term rate steady at 0.25% during its two-day policy meeting.

JPY vs USD at 153.34

The central bank also revised its core consumer inflation forecast for fiscal 2025, adjusting it slightly lower to 1.9% from 2.1% but cited upward inflation risks for that period.

Core inflation projections for fiscal 2026 remain unchanged at 1.9%, while “core-core” inflation—which excludes fuel costs and serves as a primary indicator of demand-driven pricing—was projected at 1.9% in 2025 and 2.1% in 2026.

Following the BOJ’s rate decision, the yen stayed under pressure, trading at 153.34 against the dollar, and the yield on the benchmark 10-year government bond saw minimal movement.

The central bank expects underlying inflation to stabilize around 2% by late 2025, supported by gradual increases in service prices.

Timing makes it challenging for BOJ to adjust rates

Kazutaka Maeda, an economist at Meiji Yasuda Research Institute told Reuters that that the timing made it challenging for the BOJ to adjust rates.

He highlighted a potential rate increase in December but added that uncertainties related to Japan’s political landscape and the upcoming US presidential election might delay further tightening.

Investors are awaiting insights from Governor Kazuo Ueda’s post-meeting briefing for signals on the pace and timing of future rate hikes.

The BOJ had already raised short-term rates to 0.25% in July after abandoning its negative rates policy in March, as it observed Japan inching closer to its long-term inflation target.

However, Ueda has indicated a measured approach, stating that while the BOJ is prepared to increase rates, it remains cautious given moderate inflation.

Recent data points to a moderate recovery in Japan, with factory output and retail sales rising in September.

However, the ruling coalition’s recent election setback could introduce policy gridlock, raising the bar for further hikes.

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Wall Street’s focus on the auto industry has taken a political twist as analysts and investors assess which stocks stand to benefit regardless of the outcome of the upcoming US presidential election.

While much of the auto sector has struggled, Tesla Inc. emerges as a potential winner regardless of whether Vice President Kamala Harris or former President Donald Trump takes office, analysts suggest.

Traditional automakers like Ford Motor Co. and Stellantis have faced challenging years in 2024, with Ford down nearly 7% and Stellantis dropping by over 40%.

General Motors has bucked the trend, up 47% in 2024, thanks in part to robust share buybacks and steady performance.

However, despite these gains, traditional auto stocks are trading at a significant discount, averaging just five times their projected 2025 earnings — a fraction of the S&P 500’s multiple of 21.

EV makers have also seen mixed results. Tesla is up 5.7% this year, lagging behind the broader market, while electric vehicle (EV) startups Lucid and Rivian have seen steep declines, down 40% and 54%, respectively.

EV challenges dampen growth prospects

While the US election might play a role in the auto sector’s future, the industry is facing challenges that extend far beyond political considerations.

The sector has encountered obstacles in scaling EV production, with slowing growth, rising incentives, and high inventories adding pressure on profits.

Additionally, car prices have softened, and automakers continue to grapple with high dealer inventories and slowing production growth.

Despite the industry’s investment in EV infrastructure and the push for cleaner energy alternatives, growth has been slower than anticipated.

For many analysts, this indicates that the challenges facing automakers are deeply structural and unlikely to be significantly altered by the results of the presidential election.

Election impact: Harris win versus Trump victory

Should Harris win the election, Wall Street expects “business as usual,” with no significant changes to emissions policies or EV tax incentives.

A Trump victory, however, could bring significant changes to EV tax credits and trade policies that impact the auto industry.

Trump has previously expressed intentions to remove tax credits for EVs, potentially slowing growth in the sector.

Additionally, his tariff policies, including potential tariffs on Mexican imports, would impact automakers with significant production operations in Mexico, such as GM and Stellantis.

John Murphy, an analyst with BofA Securities, believes that Trump’s policies could be slightly positive for traditional automakers like Ford and GM, which have more profitable gas-powered vehicle lines.

According to Wolfe Research analyst Emmanuel Rosner, Ford would fare particularly well under a second Trump term due to its relatively limited exposure to Mexican production.

Tesla’s unique position

Tesla is expected to perform well under either administration.

Analysts believe that if Harris is elected, the company will continue to benefit from tax incentives for EVs and from the sale of regulatory credits.

In the event of a Trump win, Tesla’s domestic manufacturing could give it an advantage, as the company has no production operations in Mexico.

Beyond manufacturing, Tesla’s planned foray into autonomous driving technology may also benefit from a Trump presidency.

A Trump administration might favour deregulation for autonomous driving technology, which could boost Tesla’s stock as the company aims to launch its robo-taxi service by 2025.

Auto parts suppliers face mixed fortunes

Auto parts suppliers, including Aptiv and TE Connectivity, are seeing unique impacts from the current political landscape. In 2024, these companies in the Russell 2000 index have fallen an average of 27%, trading at just 12 times projected earnings.

However, analysts believe a Harris administration would favour EV parts suppliers as they supply components specifically tailored for EV production.

According to Rosner, Aptiv and TE Connectivity’s reliance on EV manufacturing positions them for growth under policies favoring electric vehicle expansion.

While political developments could influence these companies, analysts caution that factors beyond the election will play significant roles in the auto industry’s future.

Supply chain resilience, advancements in EV technology, and the market’s evolving preferences for electric over traditional gas-powered vehicles are key elements that will shape long-term performance.

Key events shaping auto stocks

As the US election draws closer, Wall Street is tracking factors that could influence auto stocks.

Analysts suggest that while politics could add complexity, underlying fundamentals will continue to drive stock valuations across the sector.

Tesla, for instance, remains a standout in the industry as it navigates the regulatory landscape while pushing forward on innovation in EV and autonomous driving technologies.

In the case of Ford and GM, investors are evaluating whether their traditional vehicle portfolios will provide stability in a shifting political environment.

And for EV parts suppliers like Aptiv and TE Connectivity, their fortunes may hinge on which administration takes office and how it approaches emissions policies.

The auto industry faces a unique intersection of political and market dynamics in the lead-up to the election.

But as analysts warn, the performance of individual stocks and the sector as a whole will rely on more than just the policies of the next president.

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China’s manufacturing sector showed signs of recovery in October, with the Purchasing Managers’ Index (PMI) edging up to 50.1, marking the first expansion in six months.

This uptick, combined with a slight rise in the non-manufacturing PMI to 50.2, suggests that Beijing’s recent stimulus measures are beginning to lift economic activity and boost confidence across sectors.

As China grapples with a sharp property market downturn and subdued consumer sentiment, this latest data signals potential early success for policymakers aiming to reach the year’s 5% growth target through renewed fiscal support.

The increase in October’s PMI, moving from September’s 49.8 and crossing the critical 50-point threshold that separates growth from contraction, indicates a gradual improvement in manufacturing.

Additionally, the non-manufacturing PMI, which covers both construction and services, crept up from 50.0 in September to 50.2 in October.

The positive momentum across sectors highlights the initial effects of Beijing’s strategic fiscal moves, especially the surge in government bond issuance over recent months.

A significant part of China’s renewed fiscal approach includes accelerating government spending, largely funded by a record government bond issuance seen in August and September.

These funds have reportedly bolstered infrastructure and other critical investments, infusing cash into sectors facing prolonged challenges, particularly construction and manufacturing.

According to Xu Tianchen, a senior economist at the Economist Intelligence Unit, the heightened issuance of bonds is a key driver of this initial recovery phase.

Xu noted that the extra liquidity provided by the bonds directly translates to fiscal spending, signaling the government’s determination to tackle both immediate economic concerns and long-term financial stability.

China’s bold stimulus package

In late September, China, led by President Xi Jinping, introduced a robust fiscal and monetary package aimed at stabilizing its economy amid signs of a downturn.

The stimulus plan features 2 trillion yuan (around $284 billion) in sovereign bonds, allocating half to ease the debt burdens of local governments and the other half toward consumer support initiatives.

The People’s Bank of China (PBOC) also cut key interest rates, reducing the 1-year medium-term lending facility rate to 2% and the main policy rate to 1.5%, aiming to lower borrowing costs and encourage lending across sectors.

To revive the struggling real estate market, the government lowered the minimum down payment for second-time homebuyers from 25% to 15%.

This reduction is intended to drive home purchases and bring stability to the property market, which has faced prolonged challenges.

In a move to uplift financial markets, Beijing has allocated 500 billion yuan in loans for investment funds and brokers, supplemented by 300 billion yuan to finance share buybacks for listed companies.

These measures are designed to bolster market confidence and counter the wealth erosion caused by the ongoing property crisis.

This comprehensive package marks a shift from earlier, more limited measures rolled out in May, underscoring Beijing’s commitment to a “whatever-it-takes” approach to economic stabilization as it pursues its 5% growth target for 2024.

Challenge lies in rebuilding consumer confidence

China’s economic challenges have been compounded by a struggling property market and tepid domestic demand.

However, early signs of recovery in manufacturing, alongside Beijing’s fiscal intervention, indicate that confidence might be gradually returning.

The proposed issuance of over 10 trillion yuan ($1.40 trillion) in additional debt in the coming years, primarily to address local government debts, could further shore up confidence and ensure a more stable fiscal outlook.

This large-scale debt issuance, anticipated to be approved soon, would provide crucial support for local governments managing significant off-the-books debt, allowing them to reinvest in local economies and stabilize financial conditions.

For China to sustain these early signs of recovery, it will need to manage key risks in both the domestic and international arenas.

Domestically, the challenge lies in rebuilding consumer confidence and addressing property market fragility, which remains a major drag on economic activity.

Externally, China’s manufacturing sector remains sensitive to global demand shifts, trade policies, and geopolitical tensions, particularly with major trading partners like the United States.

Overall, the October PMI expansion serves as an encouraging sign of China’s fiscal support making an impact, but sustained recovery will require continued policy adjustments and targeted support to navigate domestic and global uncertainties.

Policymakers are likely to maintain a fine balance between stimulating growth and managing debt risks to keep the world’s second-largest economy on course toward its growth goals.

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As the US stock market approaches its traditionally best-performing six-month period from November through April, investors are balancing hopes for continued growth against rising Treasury yields and looming presidential election uncertainties.

Defying the “sell in May and go away” market adage, the S&P 500 has already experienced strong performance from May through October, setting the stage for what could be a robust November-to-April stretch if history serves as a guide, MarketWatch reported.

History supports a November-to-April rally

Data from CFRA Research shows that the November-to-April period has consistently outperformed other six-month stretches dating back to 1945, with the S&P 500 averaging a nearly 7% gain compared to a more modest 2% in the May-to-October period.

In a recent client note, Sam Stovall, CFRA’s chief investment strategist, highlighted the market’s track record, stating,

Not according to history, which says, but does not guarantee, that prior momentum typically served as a running start to the following November-to-April period.

This year, the market has already seen a remarkable surge, with the S&P 500 gaining over 16% from May through October, putting it on track for its largest May-to-October rally since 2009.

As Stovall noted, past patterns indicate that when the S&P 500 has gained over 10% in the May-October period, it has, on average, increased by 13% in the following November-April months.

Moreover, history shows five occasions where the S&P 500 delivered double-digit returns across both the November-April and May-October periods.

Of those, the index saw further growth in four instances, averaging an 11% gain in the following November-April period.

The favorable six-month stretch has historically benefited not only US large-cap stocks but also small-cap indexes like the Russell 2000, as well as international indexes such as MSCI EAFE and MSCI Emerging Markets, according to CFRA data.

This track record suggests that the market could still have room to grow despite recent gains.

Rising yields, US election concerns hamper investor sentiment

Despite the encouraging historical data, investor sentiment remains cautious as Treasury yields and election-related concerns add complexity to the market outlook.

Last week, a sharp rise in the 10-year Treasury yield unsettled the stock market, with longer-dated yields reaching their highest levels in almost three months.

At the core of this concern is the potential fiscal impact of the upcoming election.

The race between Republican Donald Trump and Democrat Kamala Harris has stirred worries that the next administration might increase the federal deficit, creating additional pressure on yields.

For equities, the critical level to watch is the 10-year Treasury yield at 4.3%, a threshold that has previously presented challenges for stock momentum.

José Torres, senior economist at Interactive Brokers, weighed in on the issue, noting,

With stocks up 23% year to date, how much room is left for more upside? These 10 months have been terrific [for the S&P 500], but they are still behind the pace of many recent years — with 2023, 2021, 2019 and 2013 delivering 24%, 27%, 29%, and 30% [over the first 10 months of the year] for investors.

For stocks to continue their uptrend, Torres indicated several conditions that could support further growth, including a “red sweep in Washington, favorable AI comments on earnings calls, tempered economic data, and calmer interest rates.”

Will US stock market scale its ‘wall of worry’?

Market analyst Stovall remains optimistic about the potential for continued growth, suggesting that the stock market may persist in climbing its “wall of worry.”

In a follow-up interview with MarketWatch, he expressed confidence that favorable economic data, alongside anticipated interest-rate cuts and robust earnings in the technology sector, will provide further support to the market.

“I expect a jump in stock prices as we get more clarity on rate cuts and as tech earnings continue to exceed expectations,” Stovall said.

On Tuesday, the US stock market closed with a mixed performance, further illustrating the market’s resilience amid fluctuating conditions.

The Nasdaq Composite ended up 0.8%, marking its 28th record close of the year, while the Dow Jones Industrial Average slipped by 0.4% and the S&P 500 posted a 0.2% gain.

With history, broader market participation, and potential policy support on its side, the US stock market may yet see its best-performing period deliver the gains investors are hoping for despite the looming uncertainties.

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In a bold move signaling its commitment to the cryptocurrency political landscape, Coinbase has pledged $25 million to the super PAC Fairshake, aiming to bolster crypto-friendly candidates in the upcoming 2026 midterm elections.

This announcement comes on the heels of the ongoing 2024 election cycle, as the crypto industry ramps up its influence in American politics.

Coinbase CEO Brian Armstrong asserts that the “crypto voter” is a burgeoning force, with expectations that the next Congress will be the most pro-crypto yet.

This strategic investment brings Coinbase’s total commitments to Fairshake to nearly $100 million, solidifying its position as the leading backer of the PAC, which has raised over $200 million this election cycle.

Crypto industry has spent millions this election: here’s why

The crypto industry has emerged as a significant player in political funding, surpassing traditional heavyweight donors.

According to Federal Election Commission filings, crypto firms and executives have collectively injected approximately $120 million into federal races this election cycle, eclipsing contributions from established political powerhouses like the Koch family.

Fairshake, as the leading pro-crypto super PAC, has focused its spending on candidates perceived to be favorable to digital assets, while simultaneously targeting those who oppose crypto initiatives.

Notably, Fairshake has directed over $13 million against key Democratic candidates, including Sen. Katie Porter and Reps. Jamaal Bowman and Cori Bush, all of whom lost their primaries.

As the political landscape heats up, one notable battleground is Ohio, where Democratic Sen. Sherrod Brown faces a challenging re-election campaign against Republican candidate Bernie Moreno, a blockchain entrepreneur.

Crypto advocates have intensified their efforts in this race, channeling tens of millions of dollars to support Moreno, illustrating the industry’s willingness to back candidates who align with its interests.

The upcoming elections will serve as a litmus test for the crypto industry’s clout in Washington, especially as major political figures like former President Donald Trump and Vice President Kamala Harris court the crypto community.

Trump has recently pivoted his stance on cryptocurrency, promising to position the US as the “crypto capital of the planet” and vowing to fire SEC Commissioner Gary Gensler if elected.

His campaign has seen substantial crypto donations, with a pro-Trump PAC raising over $7.5 million in crypto since June.

This shift in rhetoric has boosted enthusiasm within the industry, contributing to a rise in Bitcoin’s value as election day approaches.

Conversely, Harris has maintained a more cautious approach to crypto, though she has started to show a degree of support, emphasizing consumer protection while encouraging innovation in digital assets.

The divergent strategies of these candidates highlight the complex dynamics at play as the crypto sector seeks favorable regulatory frameworks and clear guidelines from authorities like the SEC.

As the 2024 presidential election draws near, the cryptocurrency industry’s political ambitions are clear.

Industry leaders, such as JP Richardson, CEO of Exodus Crypto Wallet, have made substantial contributions to political campaigns, signaling a desire for regulatory clarity and support.

Richardson’s experience underscores a growing sentiment among crypto stakeholders: the need for a government that not only understands but also embraces the transformative potential of digital currencies.

Coinbase’s investment in Fairshake exemplifies the cryptocurrency industry’s proactive stance in shaping its political future.

With millions already spent and a diverse array of candidates targeted, the upcoming elections will be crucial in determining whether the pro-crypto agenda gains traction in Congress and beyond.

The growing momentum of the “crypto voter” could redefine the political landscape, marking a significant shift in how digital assets are perceived and regulated in the United States.

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