Traders Blog

US Mid-Term Elections: Reason to trade?
06/11/2018

It feels like yesterday when, to the shock and awe of many, Donald Trump was elected as the 45th President of the United States. Fast forward two years and we are halfway through his tenure with the US mid-term elections acting as his first official “progress report”.

If voting numbers are anything to go by, voters have a lot to say about the state of country and President. In more than 50% of the states, early voter numbers are already higher than the ones during the 2014 midterms, indicating the importance and gravity of this election.

But let’s dig deeper and examine the specifics as well as possible trading implications of the election.

Scenarios

All the seats in the House of Representatives, and more than a third of the Senate seats are up for grabs, opening the door to one of the parties taking control of both chambers. What’s the possibility of the Democrats achieving that? Not that big, even though election upsets are not a strange phenomenon.

In case the Republicans manage to keep both chambers though, trading outcomes will probably mirror those following Trump’s election in 2016, with an increase in both stocks and the dollar.

Consensus

The consensus and early opinion polls suggest that a split Congress is the more likely scenario. That will probably yield no real market fluctuation as such an assumption is already priced in trading assets.

In any case or whichever scenario materialises in the end, mid-term elections always garner attention for a good reason. From a trading standpoint, the least you can do is keep your antennas up and keep a sense of urgency to the news and exit polls.

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