Today
The Democrats’ sweep of both chambers of Congress in the U.S. midterm elections is helping lift markets this morning, as investors anticipate more constraints on Trump’s agenda, potentially reducing policy uncertainty and inflationary pressures. S&P 500 futures advanced 1.1%, TSX futures gained 1.4%, and European equities rose 1.4%, while the U.S. dollar weakened against major currencies and the 10-year Treasury yield declined 3 bps to 4.93%. The positive market reaction reflects expectations that a divided government will limit additional fiscal stimulus and government borrowing, helping ease upward pressure on Treasury yields while reducing the likelihood of more extreme policy measures. The Democratic wins, however, introduce uncertainty surrounding future data centre development and tech regulation, particularly in Texas and Georgia, which together account for one-third of U.S. AI data centre spending.
Yesterday’s U.S. midterm election saw the Democrats secure a decisive victory, gaining control of both chambers of Congress in a major rebuke of Trump. Voting against the party in the White House during midterm elections is hardly unusual, with Bill Clinton, George W. Bush and Barack Obama all suffering congressional losses during their presidencies. But the scale of the Democrats’ victory, taking control of both the House and Senate, suggests this was more than the usual midterm backlash. Trump’s second term has included sweeping tariffs, mass deportations, expanded use of executive authority and military operations in Venezuela and Iran, to name a few. The war in Iran, higher energy prices and broader cost-of-living pressures may have eroded support beyond Trump’s most loyal base. While it is difficult to isolate the impact of individual policies, the results suggest voters were expressing dissatisfaction with the direction of the current administration. Economic dissatisfaction played a key role in the election, as rising energy prices, higher borrowing costs, tariffs, and inflation erode household purchasing power. According to voter surveys, 75% of midterm voters showed anger or dissatisfaction with the country’s direction, while polling indicated that healthcare and housing affordability were major concerns. The Democratic takeover will likely constrain (some of) Trump’s agenda during the final two years of his presidency, with party leaders expected to prioritize affordability measures, potential reversals of healthcare spending cuts and expanded congressional investigations into the administration.
Bank of Canada Governor Tiff Macklem does not see Mark Carney’s fiscal plans as a significant source of inflationary pressure, despite the central bank’s recent decision to raise its benchmark interest rate to 2.5%. Speaking before Parliament’s finance committee, Macklem emphasized that Canada’s excess economic capacity and the government’s focus on productivity-enhancing investment rather than short-term consumption spending should help limit the inflationary impact of fiscal stimulus. His comments come ahead of Thursday’s federal budget, which is expected to include a deficit of approximately 2% of GDP. The BoC expects economic growth to strengthen in 2027 as exports and capital investment recover, with government initiatives potentially supporting productivity and expanding the economy’s long-term productive capacity. However, some economists disagree with Macklem, saying that substantial federal and provincial fiscal support is working against the central bank’s efforts to restrain inflation through higher borrowing costs.
Getting in before the rate hike. Toronto’s housing market showed some signs of stabilization in October, with seasonally adjusted home sales increasing 1.2% over the month. This marks the first monthly gain since July as buyers took advantage of lower property prices despite rising borrowing costs. The benchmark home price edged up 0.1% to $928,800, while new listings increased 3.8%, suggesting that market activity is improving. The BoC’s recent 25 bps rate increase to 2.5%, is expected to add pressure to variable-rate borrowers, raising concerns about the sustainability of a housing recovery. Fixed-rate mortgage borrowers are also facing higher financing costs, with Government of Canada five-year bond yields rising more than 50 bps since late June, reflecting broader inflation concerns and tighter financial conditions. Officials from the BoC have acknowledged that higher borrowing costs are weighing heavily on Toronto and Vancouver, weakening the outlook for housing amid ongoing economic uncertainty and Canada-U.S. trade tensions.
Maybe all of those phishing training modules are a good thing. Binance’s record $6.3 billion cyberattack was the result of a months-long operation in which hackers tricked employees into installing malicious software and revealing login credentials. The attack began in June when an engineer downloaded a compromised AI coding tool. In September, another employee was targeted through a fake job interview, allowing hackers to gain further access to Binance’s internal systems. Using stolen credentials, they eventually gained control of systems responsible for approving cryptocurrency transactions and transferred funds out of the exchange. Binance temporarily suspended withdrawals and pledged to reimburse affected customers. The FBI and Binance have linked the attack to North Korea’s TraderTraitor hacking group, also responsible for the $1.5 billion Bybit theft in 2025. Analysts estimate North Korean hackers have stolen $7.6 billion in cryptocurrency this year alone, raising concerns that the proceeds could help finance the country’s nuclear and missile programs.
Abandon ship! Passengers on a residential cruise were forced to disembark in Cambodia after the operator could no longer afford to continue its voyage. The ship, which began sailing in October 2024, offered long-term and permanent residential packages, including a four-year option costing $320,000 per couple. However, the Iran war caused monthly fuel expenses to rise from $1,800 to as much as $8,000, overwhelming the company’s finances. While the ship operator tried to cut down on costs by slowing the ship to preserve fuel and extending port stays, it wasn’t enough to keep the ship afloat (financially). Passengers reported deteriorating food quality and fewer excursions before receiving just seven hours’ notice to leave the vessel in Cambodia, with many facing uncertainty over where to stay and how to get home.
Diversion: Came in like a wrecking ball
