US Congress holds midterm elections on Tuesday and as we get close to the Election Day, here are the expectations as forecasted by the economists and researchers of 7 major banks regarding the outcome.
Most of the economists and researchers are suggesting that the markets should be braced for a divided Congress as Democrats seem set to take control of the US House of Representatives, while the Republicans are likely to retain Senate control.
Deutsche Bank
“In view of analysts at Deutsche Bank, tomorrow’s US mid-term elections are the focal point for the week and polls and betting markets indicate that the Democrats are likely to take control of the House, while the Republicans are likely to retain Senate control.”
“The major issues for voters are healthcare, immigration, and trade policy. For markets, the key issues are whether to expect further fiscal stimulus, and what the implications are for trade policy. On the former, unified Republican control is likely more bullish, while on the latter, a divided government could de-escalate the current trade conflict.”
Westpac
“The US Congress holds midterm elections on Tuesday and the Democrats are hoping to break their grip on the levers of power, according to analysts at Westpac.”
“Markets should be braced for a divided Congress but midterms often produce surprises so global markets could be whippy around the results on Wednesday (AEDT).”
“While midterms usually garner much less interest than presidential elections there has been a surge in voter turnout in primaries and special elections ahead of November elections.”
“Democrats seem set to take control of the US House of Representatives with some pundits calling for a “blue wave”.”
Nomura
“Analysts at Nomura suggest that the 2018 US midterm elections will be the highlight of this week and at the moment, the most likely outcome is a Democrat takeover of the House, while Republicans maintain control of the Senate.”
“This would be consistent with polling, expert forecasts, candidate fundraising and special election results. However, uncertainty remains high. The economic environment should favor Republican incumbents.”
“In addition, the geographic distribution of the House implies that Democrats will need to win the popular vote by 5- 6pp to win a majority in the chamber.”
ING
“In view of analysts at ING, Tuesday’s US mid-term elections will have a major say over where the dollar trades for the rest of the year.”
“Long dollar/short EM positioning is vulnerable going into this election risk.”
“The fiscal/monetary mix has had a big say in the dollar, and that’s why mid-terms are important. Pollsters expect the House to go to the Democrats, which reduce chances of fresh stimulus, raise chances of debt ceiling grid-lock and probably be slightly dollar negative.”
“A Red Wave of a Republican hold in Congress is unexpected and would probably be dollar bullish.”
Rabobank
“Polls are suggesting that the Democrats are on course to win back the House, while Republicans are on course to hold the Senate. For many, the poll will be viewed as a referendum on Trump. A WSJ/NBC poll released yesterday indicated that nearly 75% of likely voters said their vote was meant to send a signal about the President. 32% said their vote was a signal of support and 40% said it was a sign of opposition.”
TDS
“Recent polling points towards a divided Congress, with the GOP predicted to maintain a slim majority in the Senate while the Democrats look likely to take the House. This will result in gridlock through 2020 and raises the risk that Democrats pursue impeachment and bog the administration down with investigations, which reduces the odds of any further stimulus.”
Danske Bank
“In view of analysts at Danske Bank, markets focus remains on politics as tomorrow, the US mid-term elections take place, where the most likely outcome seems to be a divided Congress.”
“We do not expect the midterms to have big implications for growth and financial markets.”
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