Rates Meet the Ballot Box
Editor's note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.
The Federal Reserve held the federal funds target range at 3.75%–4.00% on October 28 in a 10-2 vote. Federal Reserve Chairman Kevin Warsh said inflation is too high but that the central bank was awaiting more data before making a decision, leaving traders to judge whether the pause marks a stopping point or merely more time before another increase.¹
A Trio of Key Catalysts
The decision gives markets a new monetary policy baseline five days before Election Day and nine days before the October jobs report. Each event can rewrite the interpretation of the one before it. A Fed signal that initially lifts equities, for example, could meet a different reaction if the election changes expectations for spending, taxes, deficits, or Treasury issuance.
This sequence also compresses several sources of volatility into a short window. Traders may respond first to the policy rate, then to the fiscal outlook, and finally to labor data that tests whether either narrative fits the economy.
The Ballot Reaches the Bond Market
The election and its fiscal implications could spill into the Treasury market. The Congressional Budget Office has found large and growing federal debt increases long-run interest rates, with borrowing needs, savings, productivity, and risk premiums all affecting the path.²
A result associated with wider deficits or more borrowing could increase attention on Treasury supply and the compensation investors demand to hold longer-dated debt. An outcome suggesting tighter fiscal constraints could produce a different response. Divided control introduces another variable by changing assumptions about how quickly tax and spending proposals can move.
One Result, Several Market Readings
Equities must weigh both sides of that fiscal signal. Expectations for stronger growth or supportive policy can help the earnings outlook, while higher long-term yields can raise discount rates and financing costs. For traders looking to play the broader U.S. stock market, Direxion Daily S&P 500 Bull 3X ETF (Ticker: SPXL) and Direxion Daily S&P 500 Bear 3X ETF (Ticker: SPXS) seek daily investment results, before fees and expenses, of 300%, or 300% of the inverse, of the performance of the S&P 500 Index.
Treasury traders have a different split to watch. The Direxion Daily 7-10 Year Treasury Bull 3X ETF (Ticker: TYD) and Direxion Daily 7-10 Year Treasury Bear 3X ETF (Ticker: TYO) seek daily investment results, before fees and expenses, of 300%, or 300% of the inverse, of the performance of the ICE U.S. Treasury 7-10 Year Bond Index. The pair gives traders leveraged or inverse exposure to the intermediate segment, where expectations for the Fed’s policy path can carry substantial influence.
The Direxion Daily 20+ Year Treasury Bull 3X ETF (Ticker: TMF) and Direxion Daily 20+ Year Treasury Bear 3X ETF (Ticker: TMV) seek daily investment results, before fees and expenses, of 300%, or 300% of the inverse, of the performance of the ICE U.S. Treasury 20+ Year Bond Index. The pair extends the view to a more duration-sensitive part of the Treasury market, where inflation, fiscal supply, and term premium can also affect the reaction.
All six funds seek leveraged or inverse results for a single trading day. They should not be expected to provide three times, or negative three times, the benchmarks’ cumulative returns for periods longer than one day.
Jobs Get the Final Word
The Bureau of Labor Statistics will release the October Employment Situation on November 6 at 8:30 a.m. Eastern Time.³ Payroll growth, unemployment, wages, hours worked, and revisions will provide the first major labor-market test after both the Fed meeting and Election Day.
A stronger report could reinforce expectations that policy must stay restrictive, particularly if wage pressures remain firm. A weaker report could shift attention toward growth and employment risks. Either surprise would arrive after traders had already repositioned around monetary and fiscal signals.
The Order Matters
The first move may follow the Fed. The next may come from the ballot box, and close races could delay a clear fiscal reading. By November 6, the jobs report will test the assumptions built during both events. The challenge for traders is the market will not deliver one verdict. It will deliver three, in rapid succession, that have the potential to move markets.
1 Board of Governors of the Federal Reserve System, “Federal Reserve Issues FOMC Statement,” October 28, 2026. https://www.federalreserve.gov/newsevents/pressreleases/monetary20261028a.htm
2 Congressional Budget Office, “Effects of Federal Borrowing on Interest Rates and Treasury Markets,” March 11, 2025. https://www.cbo.gov/publication/61230
3 U.S. Bureau of Labor Statistics, “Schedule of Selected Releases for November 2026,” Accessed October 2026. https://www.bls.gov/schedule/2026/11_sched.htm
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