November 7, 2018

Deutsche Bank Research on the results of the midterm elections in the United States

Torsten Slok, Chief International Economist of Deutsche Bank:

“With the Democrats taking over the House we will now have to see what gridlock in Congress means for policy. As for the market impact a split Congress has historically been bullish for equities and we expect to see the same pattern again.

It is too early to predict where policy will go but we are watching closely for any changes in policies that matter for markets. What matters for markets is what will happen to trade policy, health care policy, immigration policy, and fiscal policy.

Trade policy will be important for inflation, GDP, and for many individual stocks. Likewise, health care policy will matter for medical inflation and for many individual companies. Immigration policy will be important for labor supply, labor market tightness, and the ongoing upward pressure on wages. And fiscal policy will matter for issuance of Treasuries and it could also matter for the level of long-term interest rates.”