Flash

Key Messages

1. The outcome of the midterm elections proved to be more than a simple referendum on the current administration. Indeed, it represented a potential inflection point for US fiscal policy and the technological narrative currently driving global markets.
2. The Democratic Party achieved a ‘blue sweep’ of the House and Senate. The shift was even larger than expected. It was probably driven by a disconnect between strong macroeconomic aggregates and the "affordability gap" (inflation and housing costs) experienced by voters.
3. Despite potential long-term regulatory risks, AI capex momentum is expected to remain intact in the short term, as presidential vetoes are likely to block detrimental legislation.
4. While equity markets historically perform well post-midterms, the Democratic majority may lead to expansionary fiscal policies, potentially pushing 10-year US yields above 5% again and supporting a scenario of gradual depreciation of the USD.