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Narrow room for manoeuvre · updated 6 November 2026

What they did

On 5 November, two days after the midterms, the Nasdaq 100 fell 6.36% and the S&P 500 4.35%; Goldman reckons 45% of planned data centre capacity is at risk of state-level pauses. The 2-year yield dropped 13.1 basis points to 4.46%, and the 10-year eased to 4.84%. On 4 November the Pentagon said it had delivered more than 25,000 uncrewed systems to CENTCOM for 782 million dollars.

Why

Hinojosa, who won the Texas governorship, has promised a moratorium on data centre permits, and the market priced state permitting as the binding constraint on AI investment. Safe-haven demand pulled the front end lower; CME FedWatch shows the probability of a 9 December hike falling from 82.7% to 66.7%. Weekly jobless claims fell to 189,000.

What they must do

On 8–9 December the Fed has to weigh energy-driven inflation, claims at 189,000 and a sharp equity correction together. After the election the administration has to choose a direction on Iran and on tariffs; January Brent jumped 3.88% to 98.29 dollars on 5 November after tanker attacks.

What comes next

October non-farm payrolls on 6 November at 16:30 TRT (Dow Jones consensus 59,000, September 29,000); 3-, 10- and 30-year auctions on 9, 10 and 12 November; the FOMC on 8–9 December; the 11 December stopgap budget deadline; Texas's new governor takes office in January.

Preference

At the Fed, gradual, data-dependent tightening; in the administration, faster build-out of AI infrastructure and cheaper air defence through low-cost uncrewed systems.

Observed behaviour

The market first read the election result as fiscal discipline, then two days later as a state-level constraint on AI investment; the front end fell 13 basis points with the equity rout, while the dollar index held flat at 101.55.

Sources

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