US midterm election preview
Key takeaways
Republicans are expected to lose their narrow House majority in the November midterm elections, while likely retaining control of the Senate due to limited competitive races.
Even if Democrats regain the House, President Trump’s immigration, trade, and foreign policy agenda is unlikely to face major constraints, as he has relied heavily on executive action rather than legislation.
However, the election cycle could heighten political and market uncertainty, with elevated deficits limiting fiscal stimulus and risks of election‑related disputes before and after the vote.
Historically, the party of the sitting American president has underperformed during midterm elections, and current conditions suggest a similar outcome. Republicans’ narrow 218–213 majority in the House, combined with a marked decline in President Trump’s approval ratings over the past year1, has pushed betting markets to price in nearly an 80% likelihood of a Democratic takeover this November2. Results from four special elections in the coming months should help gauge the extent of the shift in voter sentiment ahead of the 3 November midterms, when all 435 seats will be contested.
On the other side of the mid-term Congressional elections, is the Senate. As usual, one-third of the Senate seats will be contested during this mid-term cycle, along with two special elections to replace seats vacated by Vice President JD Vance and Secretary of State Marco Rubio. Democrats are unlikely to flip the chamber given limited competitive races and the GOP’s tie-breaking advantage. Republicans are expected to successfully defend their 22 of the 35 seats up for election which means that they hold their narrow 53–47 majority in the Senate. Betting markets currently place the odds of a Democratic Senate takeover at just 35%.
As mentioned above, even if Democrats regain control of the House, Trump’s agenda is unlikely to be meaningfully constrained as he has largely relied on executive action rather than legislation. Still, a Democratic House could launch investigations or pursue impeachment, but the absence of a Democratic Senate majority would make any conviction highly unlikely. In the unlikely event that Democrat’s win control of the Senate, the majority would still fall well short of the two-thirds votes needed to override presidential vetoes.
As the mid-term elections approach, the political risk backdrop may become more unpredictable. While pre‑election fiscal stimulus is a traditional tool, already‑elevated deficit - nearly 6% of GDP - make another round of stimulus unlikely to win support from Republican deficit hawks.
With Trump, there is also a risk of attempts to intervene in—or challenge—the election, justified by claims of Democratic “rigging” or unrest linked to border control and immigration operations. While the invocation of the Insurrection Act later this year would not be altogether surprising, constitutional protections make any successful effort to delay or derail the vote unlikely, though such moves could unsettle financial markets. In the event Republicans lose seats, the risk of post‑election disputes also remains elevated, particularly given the nearly two-month gap before the new Congress convenes in January 2027.
