Report published September 23, 2026
J.P. Morgan: Washington Policy Perspectives: Resilient Equities, Higher Rates, and Restless Voters
J.P. Morgan · September 23, 2026
With approximately 40 days until the 2026 US midterm elections, political momentum has tilted toward Democrats, who are heavily favored to retake the House while the Senate has become a toss-up due to voter discontent over living costs and high energy prices. A post-midterm split Congress is expected to push President Trump toward aggressive executive actions, raising policy volatility across tariffs, fiscal negotiations, and energy markets.
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Finvaulta summarizes J.P. Morgan's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
Key Takeaways
- 1.Democrats are viewed as having 90% odds to flip the House, while the Senate has tightened into a toss-up driven by voter dissatisfaction with cost of living and rising energy costs from the Iran conflict.
- 2.Affordability and cost of living remain the paramount stress test for voters, as 71% disapprove of President Trump's handling of the issue and energy prices eat into tax relief.
- 3.Post-midterm policy volatility is skewed to the upside, with risk of an escalated lame-duck period featuring executive orders, higher tariffs, Iran conflict escalation, and debt ceiling brinkmanship.
Table of Contents
- Top 10 Themes to Watch in the Run-up to the US Midterm Elections
- Affordability vs. Exceptionalism: Oil Shock Risk, Wealth Gains, and Higher for Longer Rates Regime
- 1. House flip to Democrats seen as overwhelmingly favored, while the Senate is increasingly viewed as a “toss up.”
- 2. Cost of living and affordability concerns driving approval ratings and dominating voter sentiment.
- 3. Rising fuel and energy prices have shifted momentum to the Democrats.
- 4. Turnout and voting mechanics (early and mail) are meaningful in close states and districts.
- 5. Neither party holds a clear economic “trust” advantage.
- 6. Populist pressure will rise regardless of the outcome, with visible backlash to “AI winners.”
- 7. Comprehensive AI policy and regulation are unlikely with fragmentation at the state level.
- 8. Congressional gridlock raises the odds that a lame-duck president could resort to more executive actions with “peak Trump” still to come.
- 9. Post-midterm policy volatility risks skew higher with tariffs, Iran escalation, and debt ceiling brinksmanship possibly on the horizon.
- 10. The midterms are not seen as a reliable predictor for 2028, and the bench of candidates for both parties looks broad.
Report data
Figure 3: Promises Made, Promises Kept – Affordability is the midterm stress test
| Metric | Estimate | Context |
|---|---|---|
| Democratic House Flip Odds | 90% | Overwhelming consensus from conference speakers on Democratic House takeover. |
| GOP Senate Retention Odds | 36% | Odds assigned by betting markets for the GOP holding the Senate. |
| US Household Net Worth 2Q Surge | 13 USD Trillion | Surge in household wealth supporting consumer resilience. |
| Trump Presidential Handling of Cost of Living Disapproval | 71% | Share of US adults who disapprove of how President Trump is handling the cost of living issue. |
| US 10-Year Treasury Yield End-of-Year Projection | 5.05% | Projected year-end 10-year yield reflecting elevated term premium. |
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