Voters will soon decide on the make up of both the Senate and the House

- Republicans fight to retain control of both chambers of Congress

- Inflation and cost of living dominate voter concerns

- Democrats target narrow Republican majorities

- Wall Street weighs political gridlock and fiscal uncertainty

By Harry Daniels

LiveSquawk News
@HarryDaniels71

1 November 2026 | 21:00 GMT

Americans head to the polls on Tuesday for a midterm election that could dramatically alter the political landscape in Washington and determine how much of President Donald Trump's agenda survives the final two years of his presidency.

With all 435 seats in the House of Representatives and 35 Senate seats (just over a third) being contested, Republicans are fighting to retain their narrow congressional majorities against a Democratic Party seeking to capitalise on dissatisfaction with the economy and the rising cost of living.

For financial markets, the stakes extend well beyond Capitol Hill. The outcome could influence fiscal spending, taxation, trade policy and the broader economic outlook, with implications for Treasury yields, equities and the US dollar.

Republicans currently control the Senate with 53 seats against 47 held by Democrats and two independents who caucus with them.

Democrats need a net gain of four seats to secure a Senate majority, while the considerably tighter balance in the House leaves control of the lower chamber vulnerable to relatively small electoral shifts.

The Senate contests in Georgia, Michigan, Maine, Ohio and North Carolina are among those attracting attention, although the final balance will depend on results across several competitive states.

Decision Desk HQ has shifted its assessments of Texas, Alaska and Maine towards Democrats, as of 2 November.

A Democratic majority in either chamber would provide a significant check on Trump's legislative ambitions, potentially complicating further tax reforms, spending initiatives and other domestic priorities.

However, the president would retain considerable executive authority, particularly over trade and foreign policy.

Inflation, household finances and the cost of living have emerged as central themes of the campaign.

Higher energy prices, driven partly by geopolitical tensions in the Middle East, have added to consumer pressures, while uncertainty surrounding tariffs and monetary policy has further complicated the economic outlook.

For Republicans, the challenge has been persuading voters that the administration's policies will deliver stronger economic growth and improve household purchasing power.

Democrats, meanwhile, have focused on affordability and the economic consequences of the administration's policy decisions.

Recent polling has indicated a Democratic lead in national voter preferences, although such surveys do not necessarily translate directly into congressional seats.

Investors will be watching particularly closely for the prospect of divided government.

A Democratic-controlled House or Senate could constrain the administration's legislative agenda, increasing the likelihood of political confrontation over federal spending, government funding and the debt ceiling.

Conversely, continued Republican control of Congress would preserve a clearer route for the administration's domestic legislative priorities.

For bond markets, fiscal policy and the trajectory of federal borrowing will remain central concerns, while equities could respond differently depending on sector exposure to taxation, regulation and tariffs.

The dollar's reaction may prove more complicated, reflecting the interaction between political uncertainty, economic expectations and Federal Reserve policy.

With early voting already attracting millions of Americans, attention now turns to Tuesday's results and the possibility that several closely contested races may take days to resolve.

Ultimately, the question for investors is not simply who controls Congress, but how the result reshapes the balance of political power and the administration's ability to deliver its economic agenda.

Listen to our US midterm preview with Kyle Kondik -- managing editor of Sabato’s Crystal Ball, the University of Virginia Center for Politics’ authoritative, nonpartisan newsletter on American campaigns and elections. He is the author of The Long Red Thread, a history of the growth of Republican power in the U.S. House of Representatives, as well as The Bellwether, an analysis of Ohio’s presidential voting history.