A week ago we experienced one of the most anticipated events of the year. The midterms of the United States implied, for better or worse, a change in the direction of the policies applied by the Trump administration. If the Republicans resisted, we would be facing a validation of the Trumpist policies of the last two years. On the contrary, if the Republicans gave in, and considerably, the political, economic and war perspectives would be adjusted to new predictions. If this happened, therefore, a new global scenario would potentially open up that would possibly help control some of the imbalances generated in these two years of administration.
And the latter is what we all know has happened. The Republican defeat has opened the local (American) and international scenario (with impacts on our economy) to new perspectives that may have had an impact on market forecasts and the evolution of certain high-frequency indicators. Not in vain, in recent days the 12-month Euribor has chained four downward sessions after reaching a maximum on November 3 (from 3.317% to 3.204%), while many analysts attributed it to the Republican defeat last week. However, the evolution of these variables beyond that day suggests that this is not necessarily what would have happened, or at least with a minimum of accuracy. Many of the indicators potentially affected by the election results were already moving in the current direction before the recount. The elections would simply have accelerated a change in progress.
That said, and in light of the recent evolution of these indicators, the question we ask ourselves in this column is whether we would be facing the end of the energy shock of 2026 and, therefore, facing a more benign evolution of prices and rates for the coming months and if the elections have had something to do with it. The question is legitimate, although the answer is not clear. That some variables have marked new trends even before the results could be due either to the fact that they did not depend on them or simply to the fact that they were anticipated given the forecasts of the electoral surveys that were finally confirmed. For example, Brent closed October above $113 (January contract) after eight months of war. This drop starts on Monday, November 2, more likely related to the appearance of information about a potential draft US-Iran peace agreement and Qatari mediation than to the Democratic victory; although it is not possible to rule out that both events are related, at least politically. Just that day, Brent crude oil lost 8.7 dollars per barrel.
Another indicator, the profitability of Spanish debt, also shows signs of weakening. Thus, the 10-year bond fell from 4.04% on October 23 to 3.90% on November 2, one day before the vote was taken. As the risk premium remained at 60 bp, this drop would be due more to a European movement than a Spanish one.
As for gasoline, its evolution is also prior to the North American elections. The price of this fuel has been falling for five consecutive weeks, almost 11% from the maximum at the beginning of October. In other words, when the polls opened, the market had already begun to discount the end of the energy peak.
Does all this mean that the change in the evolution recently marked by North American policies and the energy shock have not been influenced by the recent electoral result in the US? As I have anticipated, the answer is not simple, since there would be at least two potential channels through which it could have influenced.
Firstly, through a geopolitical channel, which we can consider the most important of the two. When Trump himself admits that the war with Iran could have influenced the defeat and Vance points to it as a cause, the market read the words of a president with less margin and more incentives to close the conflict. Thus, on November 4, Brent fell another 8.7%, to $94.6, and the week closed with the largest weekly drop since 2020. Before the elections, it is also likely that the markets paid attention to the surveys that predicted a serious corrective to the Trump administration. This case would be transferred, in advance, to the markets.
Secondly, through a fiscal channel, secondary for Spain, but still important. And a power divided between the White House and Congress would limit a new fiscal expansion, which is why treasuries fell in all terms. Although what the ECB does is more important for Spanish debt, it is still influenced by what global markets do. For its part, the euro/dollar rose to 1.12 on the 4th, but on Friday it had corrected this movement, so there is no relief in energy costs via exchange rates.
Whatever the cause, what is evident is that something has changed in recent weeks. Therefore, and whatever the ultimate cause, could we be facing the beginning of the end of the current energy crisis initiated by the war in the Persian Gulf? Obviously whether this is the case depends on many factors, but without a doubt we could be in that situation.
The first thing is the deposit facility, which the ECB maintained at 2.50% in its last meeting, on October 29, after the September increase, but leaving the door open to increase on December 17. However, with the turn of the Euribor, the market could have begun to doubt that we will finally witness such a rise in December. It is true that for those who review their mortgage this month there is still no relief. However, Christmas could come with a small but nice gift. The evolution of energy prices and debt rates would confirm this potential trend. The same thing could happen with inflation, which could experience a soft but decisive decrease in the interannual rate in the following months, which would help to contain and even lower rates.
