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A Macro View for the Month of October

As we enter the last quarter of the year, the investing world looks at the period ahead, trying to better position for the year’s end. This is the most important quarter of the year, for a simple reason – the U.S. election day is November the 3rd. Besides the election, here are some important topics to consider for the months ahead, starting with central banks’ decisions and ending with commodities. 

ECB to Increase PEPP

One of the main events last week was the further drop in the core Eurozone inflation. The ECB is forced to act by delivering more QE – the only thing it can do at this point. However, because of the elections in the United States, it will likely wait until December before announcing an increase in the PEPP – Pandemic Emergency Purchase Programme. Rumors in the market are that the ECB will go for half a trillion Euro increase, large enough to move the needle when it comes to future inflation expectations.


Brexit continues to make headlines. Last week the European Commission started the infringement procedure against the United Kingdom for the breach of the Withdrawal Agreement. However, it still feels like a deal is possible, and the risk is that the GBP will squeeze higher in the months ahead. In any case, the volatility is likely to remain elevated on the GBP pairs when compared to other markets.

Fiscal Stimulus

It appears that the U.S. stock market remains elevated in the hope of a new fiscal stimulus. What is unclear is if this stimulus will come ahead of the elections or after.

The election’s outcome is likely to decide the size of the stimulus too. If Biden wins and the Democrats win the Congress too, then the size of the fiscal deal will outpace other scenarios, likely leading to a new leg higher on the stock market.

Speaking about the stock market, the earnings season starts, and all eyes are on the corporate America to see if it delivers yet another strong quarter. The focus, once again, will be on the tech sector and the Nasdaq 100.


The price of oil had a rough week – it dropped over five percent. However, undersupply is likely to persist for the period ahead, and in the months leading to 2021 the price of oil may recover towards the $60.

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