US midterm elections: fiscal gridlock on the horizon? 

  • We expect the most probable result to be a split Congress, with Democrats winning the House and Republicans retaining the Senate. This outcome would likely support policy continuity and reduce the chances of major fiscal or legislative shifts. A Democratic sweep remains a realistic possibility as well. In that case, the risk of a more interventionist policy agenda would increase, though it would still be constrained by the size of the budget deficit. By contrast, a Republican victory in both chambers appears unlikely.
  • Financial markets are increasingly factoring in a Democratic sweep, but policy uncertainty remains. A Democratic House is already largely reflected in prices, while the Senate continues to be the main area of uncertainty. A Republican recovery or a stronger use of executive authority could still catch markets off guard.
  • The midterm elections may also influence sector performance. Ongoing investment in artificial intelligence should continue to benefit the IT sector, while industrials and materials could gain as capital spending becomes more widespread. The outlook for energy is more mixed: higher energy prices remain supportive, but reduced resistance to renewable energy could improve the competitiveness of renewables.

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Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 23 October 2026. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results.
 

Date of first use: 23 October 2026.

Doc ID: 6037656