HOW MIDTERM ELECTIONS MAY MOVE MARKETS

Midterm elections are upon us, with Election Day on Tuesday. Republicans are strongly favored to win the House, and the Senate is roughly a tossup. We believe either outcome would be marketfriendly, although the bigger market driver will likely be central banks’ efforts to tame inflation. In this week’s Weekly Market Commentary, we look at why the stock market may respond favorably to the midterm election, whatever the outcome.

WHERE THINGS STAND HEADING INTO ELECTION DAY

While we would never consider any election a lock no matter what the pollsters say, Republicans are very solid favorites to retake the House. This alone would be enough to give us a mixed government, where a party different from the president’s controls at least one Chamber of Congress. If we knew nothing else, Republicans would be favored simply because the sitting president is a Democrat