Americans head to the polls on Tuesday, November 8 but it could be days before we know the midterm election results. Investors should be prepared, as unexpected outcomes can create market volatility, economists at Morgan Stanley report.
“Republicans are expected to win a majority in at least one chamber of Congress. Therefore, an outcome in which Democrats expand their majorities in Congress would buck expectations. Hence, a better-than-expected election night for Democrats means markets could assign a higher probability to further fiscal expansion – with Congress and the Fed effectively pulling in opposite directions on inflation. In the short term, that could mean higher Treasury yields and a stronger Dollar, reflecting the potential for a higher peak federal funds rate.”
“Republican leadership could bring new risks in the form of US public policy choices. If the economic outlook sours in 2023 in unexpected ways, the specter of the Budget Control Act could weigh on risk markets such as growth stocks and higher-yield corporate bonds. At the same time, Treasury bills could be under pressure this time around at the same time as quantitative tightening is being executed, further pressuring market liquidity.”
“Early reported results should look favorable to Republicans, but as in 2020, leads can vanish over time. Consider the Pennsylvania Senate race. Assuming mail-in ballots are cast in the same proportions and with the same party skew as they were in 2020, we estimate that the Republican candidate could win the in-person vote by 29% and still lose after all ballots are counted. Hence, we will need to reserve judgement – perhaps for days – on which party seems poised to control Congress.”
© 2000-2024. All rights reserved.
This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.