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Jan von Gerich, Global Fixed Income Strategist for Nordea Markets, notes that as was largely expected, the early results from the US midterms elections suggest the Democrats will take control of the House of Representatives, but the Democratic victory in the House was far from a landslide.

Key Quotes

“Projections from ABC News point to a Democratic gain of 34 seats, which would give them a smaller majority than the Republicans currently have. Votes are still being counted, so the results are not final at the time of writing.”

“However, the Republicans are set to increase their majority in the Senate, with ABC News suggesting a gain of three Senate seats for the Republicans. The electoral setup  strongly favoured the Republicans in the Senate, where they were defending only 9 seats vs 25 for the Democrats (counting the two independents with the Democrats).”

“The control of the House, in turn, will allow the Democrats to open new investigations on the president. It also opens them the chance to impeach the president, but such an outcome does not look likely at this point.”

“Keeping the Senate will allow the Republicans to maintain control over nominations.”

“The differing results in the two chambers will probably allow Trump to package the elections as a victory and support for his agenda. In no way will he interpret the results as a setback for his policies that would suggest a change of course would be needed.”