US elections: divided government is the most likely scenario, according to UBS
Tuesday's vote (3) renews Congress and chooses governors in 36 states; UBS sees little chance of profound changes to the economic agenda.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM SEU DINHEIRO · 2 MIN
United States voters go to the polls on Tuesday (3) to renew Congress and choose governors in 36 states. According to Seu Dinheiro, the UBS reading points to a specific scenario: a divided government, with one party controlling part of the power and the opponent with strength in the other part. In other words, the result goes far beyond the dispute for Executive command.
The background helps to understand this bet. According to the report, Trump's popularity is falling sharply, and there is a risk of the Republican Party losing seats in both legislative houses.
The UBS numbers detail the picture. The bank sees a 50% chance of Democrats winning more seats in the House and Senate, and just a 10% chance of Republicans maintaining control of both houses. Among the outcomes considered, a broad victory for the president's party appears to be the least likely.
The consequence for the economic agenda is the central point. According to UBS, profound changes to this agenda have little chance of moving forward, regardless of the result. The headline of the report places the fiscal deficit and artificial intelligence in the same context, which indicates that both themes are part of what is at stake.
For those who defend fiscal responsibility and lower taxes, the combination of a divided Congress with little chance of deep reforms has a predictable side: it makes spending expansion difficult, but it also prevents any major reforms, in any direction. Anyone hoping for an adjustment in American accounts will have to rely on bipartisan agreements, which tend to take time.
What changes for the investor
In a divided government, the chance of broad changes decreases, which tends to make investors more attentive to economic data and negotiations between parties than to large legislative packages. The report does not provide price projections, and this text does not recommend the purchase or sale of any asset.
Automatically translated from Portuguese.
