Industrial Bank chief economist Jiayang Groen said among possible US midterm
outcomes, Democratic control of the House would have the biggest market impact.
He argued that if Republicans lose the House and budget authority, the Trump
administration would find it harder to push further tax cuts or other
expansionary fiscal measures; the resulting fiscal stalemate would reduce the
likelihood of additional fiscal expansion and curb risks of further fiscal
deterioration, limiting upside pressure on long-term Treasury yields. Groen
added any Democratic House majority is likely to be narrow and would face
meaningful constraints from Senate filibuster rules and the presidential veto on
efforts to raise spending.
