Global Rates & FX Views: NFP, midterm, & refunding recap

Market volatility intensified following the U.S. election and a hawkish employment report, which showed job growth exceeding expectations alongside upward revisions to previous months. This data reinforces the case for two additional Federal Reserve rate hikes, despite market sentiment leaning toward a more dovish path. While concerns regarding increased regulation persist following the election, the data center CapEx boom remains resilient, with strong demand supporting continued infrastructure investment. Treasury refunding announcements maintain current coupon auction sizes, though debt limit risks may necessitate future adjustments by November. Current market consensus reflects a "risk-off" stance, pricing in geopolitical de-escalation in Iran and the expectation that U.S. economic growth has reached its peak. These factors collectively challenge the prevailing market view that central banks have limited capacity for further tightening.