This article is for informational and educational purposes only and does not constitute financial advice or a recommendation. Past performance is not a reliable indicator of future results. Capital at risk.
Which Markets Could Move Around the US Midterms?
The five markets most closely watched around the 3 November midterms are US Treasury yields, the US dollar, US stocks, gold and energy. What matters is not who wins but what the result implies for taxes, government borrowing, regulation and interest rates. Treasury yields tend to react first, then the dollar and gold.
For a full introduction, read our guide to what the midterms are and why markets care.
This article is for informational and educational purposes only and does not constitute financial advice or a recommendation. Past performance is not a reliable indicator of future results. Capital at risk.
Which Markets Could Move Around the US Midterms?
The five markets most closely watched around the 3 November midterms are US Treasury yields, the US dollar, US stocks, gold and energy. What matters is not who wins but what the result implies for taxes, government borrowing, regulation and interest rates. Treasury yields tend to react first, then the dollar and gold.
For a full introduction, read our guide to what the midterms are and why markets care.
What Are the Polls Pointing To?
Polling and betting markets currently favour Democrats to win a House majority, while the Senate is considered closely contested. One analysis says a House flip is already largely priced in, so the Senate and how much Washington can borrow without the other party are what matter for markets.
That is why many analysts frame November as a question of divided versus unified government. Polls can be wrong, and results in close races can take time to call, which is a risk in itself.
1. US Treasury Yields
Why it matters: Yields are the first read on what a result means for government borrowing. Bond markets may react first, with shifts in yields often feeding through to equities, currencies and broader sentiment.
What to watch: The 10-year and 30-year yields. A result that points to more borrowing tends to push long-dated yields higher. A result that implies gridlock and less new spending tends to ease them.
History: Morgan Stanley notes that since 1953 the 10-year yield has fallen by about 33 basis points on average in the six months before midterms, and has tended to be more volatile in midterm years. Past patterns are not a forecast.
For bond exposure, read our guide to fixed income ETFs.
2. The US Dollar
Why it matters: The dollar’s direction depends on why yields move. Higher yields on stronger growth tend to lift the dollar, while higher yields driven by a bigger deficit tend to weaken it.
What to watch: The dollar index alongside Treasury yields. Moves in both often come from the same source, so be careful not to take the same bet twice.
You can trade dollar pairs through XTB’s forex markets. The dollar also feeds into our Federal Reserve forecast, because rate expectations drive both.
3. US Stocks: The S&P 500 and Nasdaq 100
Why it matters: For stocks, the headline index may matter less than the sectors beneath it. Citi expects the midterms to have little effect on overall S&P 500 earnings, with the impact more likely to show up in which sectors win and lose.
The history: Hartford Funds data shows the S&P 500 averaging gains of around 2.5% in the three months before midterms and 6.5% in the three months after, based on data since 1970. Capital Group calculates that the S&P 500 has risen by an average of 15.4% in the year after a midterm since 1950. These are averages, not signals, and economic conditions matter more than any pattern.
What to watch: The Nasdaq 100 is heavily influenced by AI investment, mega-cap earnings and Treasury real yields, so it can react to yields as much as to politics. Sectors often flagged as politically sensitive include defence, semiconductors, and infrastructure and industrials.
XTB offers the US 500 and US Tech 100 as CFDs, plus individual US shares and ETFs.
4. Gold
Why it matters: Gold can attract safe-haven buying if results are delayed or contested, but its direction also depends on yields and the dollar. If results are disputed, safe-haven demand could rise, though the move also depends on Treasury yields and the dollar.
What to watch: Real yields and the dollar. Falling real yields with a weaker dollar could support gold, while higher real yields and a stronger dollar create headwinds, although safe-haven flows can offset those. T. Rowe Price’s view is that a split Congress could help the dollar and weigh on gold, because the political risk priced into gold would shrink.
Read our guide to gold trading for background.
5. Energy and Oil
Why it matters: Energy policy is a live political issue, and oil is already volatile because of the Middle East conflict. Energy markets are among those traders are watching around the vote. Strategists have also cited higher oil prices alongside midterm uncertainty and bond yields as pressures on equities.
What to watch: Energy shares and crude, particularly if the result changes expectations for energy policy or trade.
What Could Happen? Three Scenarios
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These are illustrative scenarios from third-party analysis, not predictions, and markets often react in unexpected ways.
Risk Warning
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Capital at risk. Investment values can rise or fall.
How to Approach Election Volatility
- Don’t confuse politics with outcomes. Markets respond to policy expectations and economic data, not to who you’d prefer to win.
- Expect volatility and delays. Close races can delay a result. Wider spreads and sharp swings are possible around the count.
- Avoid doubling up. Gold, the dollar and stocks can all react to the same move in yields.
- Manage risk. Use stop-losses, size positions carefully, and remember leverage magnifies losses. Read our guides to CFD trading strategies and what CFD trading is.
- Think long term. If you’re investing rather than trading, history suggests a single election rarely changes a long-term plan. Investment Plans automate regular, diversified investing.
This article is for informational and educational purposes only. It does not constitute financial or political advice. Past performance is not a reliable indicator of future results.
FAQ
Treasury yields, the US dollar, US stocks, gold and energy are the markets most commonly watched, with yields usually reacting first.
Polls close on Tuesday 3 November US time, so early results arrive in the early hours of Wednesday 4 November UK time. Close races can take longer to call.
Historically, US stocks have tended to perform better in the months after midterms than before. Capital Group’s analysis shows an average S&P 500 gain of 15.4% in the year after midterms since 1950. Past performance does not guarantee future results.
Gold can benefit from uncertainty if results are delayed or contested, but its direction also depends on the dollar and real yields.
Defence, semiconductors, energy and infrastructure are often flagged as politically sensitive. Impact varies by sector, and Citi expects the main effect to be on relative sector performance rather than the overall index.
Through US index CFDs, US shares and ETFs, forex pairs, or gold. CFDs are leveraged and high risk, so consider your risk tolerance first.
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