- New juncture in U.S. politics: Split Congress
The midterm elections marked the headlines last week as the U.S. politics entered a new juncture with a split Congress.
Democrats took control of the House of Representatives with at least 225 seats out of 435, but the calling of more close races are expected for Democrats in the coming days. The victory put Democrats in control of the House of Representatives for the first time since 2010 while Republicans managed to preserve their majority in the Senate with at least 51 seats, while two seats still have not yet been decided.
The split Congress signals a political gridlock rather than cooperation, and the next two years might be more difficult for the White House to get its legislation passed.
President Donald Trump is expected to face more resistance from the House Democrats, especially on immigration, health care trade.
- Fed keeps key rate stable
Another important item on the agenda last week was the November meeting of the Federal Reserve. Fed officials decided to keep the federal funds rate at 2-2.25 percent unanimously at the first Federal Open Market Committee (FOMC) meeting after the midterms.
In the statement released after the meeting, it was signaled that the central bank would continue its gradual rate hikes.
'The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term,” the statement said.
- resumes all pre-nuclear deal sanctions on Iran
Last week, the U.S. administration brought back all the sanctions it lifted on Iran following a historic pact world powers struck with the Islamic Republic.
Announced by Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin, the sanctions, which cover Iran's energy, shipbuilding, shipping financial sectors, took effect on Monday, Nov. 5.
The U.S. is seeking to 'alter' Iranian behavior with the sanctions and has been leaking out a stream of 12 demands it wants to see Iran agree to in exchange for re-lifting the economic penalties.
- Powell's speech and economic data on the watch list
In the U.S., the week of Nov. 12-18 will start on a federal holiday, as Veterans Day will be observed on Monday.
The trading volume is expected to be low on the first day of the week when U.S. markets are only partially open.
During the week, Fed Chair Jerome Powell’s speech on Wednesday comes at the forefront of the watch list for investors.
Powell will discuss national and global economic developments with Dallas Fed Chair Robert Kaplan.
In the data calendar, headline inflation, retail sales industrial production will be announced and followed.