Investment Event – US Midterms
The key takeaways:
- The midterm elections are poised to result in a split Congress, as widely expected
- Further tax cuts are unlikely. Increasing the debt ceiling may re-emerge as a source of political tension
- Domestic constraints could result in more activist foreign policy from the president
- Debate around infrastructure plans may intensify, but there are significant political and financial limitations to action
Democrat House, Republican Senate
The US midterm elections are poised to result in a split Congress, with the Democrats taking the House of Representatives (HoR) and the Republicans holding the Senate, as widely expected. Projections suggest the Democrats are likely to win around 230 of the 435 seats in the House while the Republicans are on target for 53-54 of the 100 Senate seats, against 51 previously.
We doubt that the new split Congress will have a meaningful impact on the trajectory of the US economy over the next couple of years. The bulk of the measures from the Tax Cuts and Jobs Act (TCJA) have already been implemented and President Trump would veto any attempt by the Democrats to reverse the stimulus.