Top 10 Themes to Watch in the Run-up to the US Midterm Elections

With roughly 40 days to the US midterm elections, political momentum is shifting. A House flip to Democratic control has long been the base case, but the Senate race is increasingly viewed as a "toss-up." The political backdrop is tightening around the perceived high cost of living, amplified by the conflict in Iran driving fuel and energy prices higher. Irrespective of the election outcome, populist politics are rising, with a lame-duck presidency potentially bringing a post-midterm resurgence of executive orders to bypass Congressional gridlock. Risks point to higher rates and higher policy volatility into next year, especially if oil stays elevated. Equities can stay resilient in the near term, and rising wealth from investment accounts has supported consumer spending; US financial exceptionalism still holds, with US household net worth surging by $13trn in 2Q alone and by close to $20trn over the last year.