United States: Trump expected to face constraints from Democratic gains, says Deutsche Bank

Democrats have a strong chance of winning at least one chamber of Congress, according to Deutsche Bank strategists. They highlight polling and prediction markets signalling Democratic gains in the US midterms. Such a result would significantly constrain President Trump’s legislative agenda, particularly on spending and the debt ceiling, they argue. Democratic control of the Senate would also impose further limits on his appointments to key posts.

Midterms Set New Limits on Policy

"Currently, the Republicans control both chambers of Congress, but the incumbent President’s party usually loses ground in midterm votes. Moreover, polling averages and prediction markets are consistently pointing to Democratic gains today. For example, Polymarket gives the Democrats a 95% chance of victory in the House as of this morning, and a 79% chance of retaking the Senate."

"Whatever the results are tonight, the new Congress doesn’t actually convene until January 3. However, even if the Democrats take just one chamber, that will have major implications for Trump’s legislative agenda, as all legislation requires majority support in both chambers of Congress. Notably from a market standpoint, that includes spending packages, as well as increases in the debt ceiling."

"So even if the Democrats just win in the House, it will constrain Trump’s room for manoeuvre. In addition, the Senate is the chamber that votes on presidential nominees, including cabinet appointments, Supreme Court justices and Fed Governors. So if the Democrats take the Senate as well (which hasn’t happened to Trump in either of his terms), then he’ll face a further constraint on who he can appoint."

"However, even if the Democrats take control of both chambers, they’re still limited in what they can do. That’s because legislation still requires the President’s signature, and that can only be overridden if two-thirds of both chambers vote for it. So Trump still retains a veto power, even if Democratic majorities were to pass legislation he was opposed to."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Learn more.)