A recent analysis by Saxo Bank has revealed a controversial outlook for 2026, predicting that the US midterm elections will be a pivotal turning point with repercussions extending beyond the United States to reshape the global financial system. The analysis suggests that these elections could bring an end to an era of intense political turmoil, paving the way for a return to economic rationality.
Historical context: The curse of half-renewal
Midterm elections in the United States are historically of paramount importance, often serving as a referendum on the performance of the president and his party. Historical precedent suggests that the president's party frequently loses seats in Congress during these elections, reinforcing Saxo Bank's prediction of a classic scenario. This recurring pattern reflects the American electorate's desire for a balance of power, often resulting in divided governments that necessitate a form of political compromise.
Political Scene Scenario: The New Kingmakers
John Hardy, the bank's chief macro strategist, believes the November 2026 elections will see Democrats narrowly win control of the House of Representatives by about ten seats. Republicans, on the other hand, will retain the Senate, but with a very slim majority. This delicate balance will create a new political landscape where a few moderate senators will act as kingmakers, their votes being the deciding factor in passing legislation, thus mitigating partisan extremism.
The digital awareness revolution and the independents
In a significant social shift, the report anticipates a strong rise in independent voters who will lead a movement against the artificial polarization fueled by social media algorithms. As awareness grows regarding the dangers of AI-generated content and deepfake technologies, the public will begin to lose faith in platforms like TikTok and Meta, preferring to return to more reliable and consistent sources of information—a devastating blow to the "digital populism" model.
Economic impact: Return to safe havens
Economically, Saxo Bank believes this relative institutional stability will redirect investment trends. As the wave of anger and uncertainty subsides, investors will turn towards traditional assets
- US Treasury bonds: Their prices are expected to rise and their yields to fall as evidence of a restoration of confidence in US institutions.
- Chaos assets decline: Assets that have thrived amid anxiety, such as cryptocurrencies and meme stocks, will see a significant decline.
- Precious metals: Even traditional safe havens like gold and silver may lose some of the luster they gained as a result of geopolitical concerns, returning to their normal levels.
Potential global repercussions
A return to domestic political stability in the United States would have a positive impact on the global economy. A calming of the political turmoil in Washington would mean more predictable trade and monetary policies, reducing volatility in emerging markets and strengthening the stability of the US dollar as the world's reserve currency, shielding it from political speculation and ushering in a post-"peak of populism" era.
