Gms midterms 2026 insights

Midterms 2026: The Stakes Beyond the Ballot Box Global Market Strategy, New York Life Investment Management

As the U.S. heads toward its midterm elections on In this piece, we look beyond the electoral horse race to November 3, control of both chambers of Congress examine what the midterms could tell investors about is in play. Whatever the outcome, the scope for major these three forces, and what those signals mean for legislation over the next two years may be limited, as markets in 2027 and beyond. divided or narrow congressional majorities typically constrain the ability to pass significant new legislation. Beyond control of Congress, the election results may The midterm math points offer insight into the economic and political forces shaping the investment landscape. to a shake-up The November midterms put control of both chambers of Over the past several years, three forces, among others, Congress in play, with a divided government as the most have shaped our investment outlook and global financial likely outcome in our view. Republicans currently hold conditions: a more restrictive rates environment, narrow majorities in both chambers: 218 Republican-held influenced by the limits of debt-financed fiscal expansion; seats to 214 Democratic-held seats in the House, the dominance of AI as a macro and market driver; and a 53-47 advantage over the Democratic caucus in and a shifting global geopolitical regime driving global the Senate.1 positioning and risk considerations. The midterm elections provide a useful read on how voter sentiment around While every House seat is contested during the midterms, these themes is evolving, even as the forces themselves roughly one-third of Senate seats are up for election. extend beyond a single election cycle.

1 U.S. House of Representatives and U.S. Senate, accessed September 2026. NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE

The nonpartisan Cook Political Report highlights greater Midterms have rarely been kind to the party in the White vulnerability among Republican-held House districts, House. History points to a persistent midterm challenge with 16 of the 21 races currently rated “Toss Ups” held for the president’s party, which has lost House seats by Republicans.2 The Senate has become increasingly in 20 of the 22 midterm elections since 1938.4 Narrow competitive, with Cook rating six races as “Toss Ups,” congressional margins, a competitive electoral map, and five of which are currently held by Republicans.3 Still, the historical headwinds facing the president’s party leave Democrats face a higher hurdle to gain control of the Senate, control of Congress firmly in play. requiring a net gain of four seats to secure a majority.

FIGURE 1 | MIDTERMS HAVE RARELY BEEN KIND TO THE PARTY IN THE WHITE HOUSE

House Senate Midterm Party in Control Seats Seats Unemployment CPI U. of Michigan elections Before Election Lost Lost Chamber Lost Rate (YoY) Consumer Sentiment

2006 Republicans (G.W. Bush) 30 6 House & Senate 4.5% 2.0% 92

2010 Democrats (Obama) 63 6 House 9.8% 1.1% 72

2014 Democrats (Obama) 13 9 Senate 5.8% 1.3% 89

2018 Republicans (Trump) 41 +2 House 3.8% 2.2% 98

2022 Democrats (Biden) 9 +1 House 3.6% 7.1% 57

2026 Republicans (Trump) 4.1% 3.4% ~55 (Current)

Sources: New York Life Investment Management Global Market Strategy, Bureau of Labor Statistics, University of Michigan, U.S. House of Representatives, U.S. Senate, September 2026.

Meaningful legislative action Fiscal risk is likely to reinforce may remain limited today’s elevated rate environment Historically, divided government has not always meant Congress holds the U.S. government’s purse strings, so legislative paralysis. There are plenty of examples of it is natural that fiscal impact is usually the top investor consequential legislation born out of compromise post- question around the midterms. But this election year, midterm elections, including the 1983 Social Security fiscal considerations are even more relevant for reforms under President Reagan and the 1996 welfare investors as we expect a more restrictive rates reforms under President Clinton.5 environment to persist. A divided Congress would likely shift more…