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According to analysts at Nomura, the most likely outcome in today’s US midterm elections remains that Democrats will take control of the House and Republicans will retain control of the Senate.

Key Quotes

“Many factors favor Democrats. First, potential voters favor Democrats by 8-9pp in socalled generic ballot polls. This gap has been remarkably stable since the summer. Second, a disproportionate number of Republicans are stepping down. This means that the Republicans have to defend an unusually large number of open seats. For example, 21 of the 27 open seats rated as competitive by the Cook Political Report are currently held by Republicans. Third, Democrats have a large advantage in fundraising. Fourth, President Trump is relatively unpopular. Finally, Democrats have performed well in off-year elections (“special elections”). In a number of key races, support for Democratic candidates has exceeded the partisan lean of the districts and outperformed President Trump’s results in 2016.”

“On the other hand, several factors favor Republicans. The economy is doing well, which tends to favor incumbents. The most important advantage Republicans have is geography. Democrats tend to be concentrated regionally. That means that in order to take control of the House, Democrats will probably have to win the national vote by at least 5-6pp.”

“In this context the Democrats’ advantage is not overwhelming. Note that in 2006 when the Democrats picked up 31 seats and took control of the House for the first time since 1994, the Democrats had an advantage of about 12% in generic ballot polls.”