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Midterms and Treasury Refunding Set the Tone for Equities
Midterms put Washington in focus, with bonds set to shape the market reaction. Explore Treasury’s debt plans, shifting earnings leadership and the next tests for the AI trade from AMD, Arm and Qualcomm.
Americans vote for a new Congress today with prediction markets favoring Democrats to take both chambers, and Treasury sets out its debt sales on Wednesday. Both events reach equities mainly through the bond market, where the 10-year yield has eased to 4.91% from its October high.
The result itself has mattered little for stocks. Since 1950 the S&P 500 has risen in the twelve months after every midterm, whichever party won control. Fiscal deadlines and debt supply are the more direct channel. Government funding lapses on December 11, and Wednesday's refunding statement is expected to leave auction sizes unchanged, so investors are watching what Treasury says about buying back long-dated bonds. Earnings remain supportive, though growth leadership is on course to pass from the largest technology companies to the rest of the index, and AMD, Arm and Qualcomm test the AI trade again this week.