Business · Markets · 1 hr ago
Bond investors doubt a divided Congress will ease US deficit concerns
Polls suggest Democrats may win at least one chamber of Congress in the US midterm elections on Nov.
3, but not enough seats to override President Donald Trump's vetoes.
In the past, a divided government has often helped US Treasury bonds, as investors expected Congress to limit new spending.
Bond investors now doubt that political gridlock will bring yields down.
The US budget deficit is about 6% of the economy, a level rarely seen outside a recession.
Investors are concerned that the deficit could keep pressure on Treasury yields, which are near their highest level in almost 25 years.
The midterm results will show whether Congress is divided, but investors are not counting on that alone to ease fiscal concerns.
Bond investors are skeptical that a divided Congress will ease concerns about the US fiscal outlook.
Polls suggest Democrats could take at least one chamber of Congress from Republicans in the Nov. 3 midterm elections.
They are projected to fall short of enough seats to override President Donald Trump’s veto power.
Since the mid-1990s, divided government has often been associated with lower Treasury yields after midterm elections.
The federal budget gap is roughly 6% of the economy, and investors doubt legislative gridlock will bring yields down from near a 25-year high.
- Who
- Bond investors are questioning whether a divided Congress will ease fiscal concerns.
- What
- Investors doubt gridlock will reduce worries about the US deficit or lower Treasury yields.
- When
- Ahead of the US midterm elections on Nov. 3; the article was published Oct. 28, 2026.
- Where
- The United States, including Congress on Capitol Hill.
- Why
- The federal budget gap is roughly 6% of the economy, and investors doubt legislative paralysis will be enough to contain it or bring yields down.
Bond investors
Historical market view
Expected effect of divided government
Bond investors
Investors doubt gridlock will ease deficit concerns or lower yields this time.
Historical market view
A split Congress or government has often been seen as a way to limit spending and contain deficits.
Treasury yields
Bond investors
Investors doubt gridlock will bring yields down from around their highest level in nearly a quarter century.
Historical market view
Benchmark 10-year yields have been lower on average one and 12 months after midterms that produced divided government.
A split Congress or government has often been associated with lower Treasury yields after midterm elections.
The article reported that bond investors were skeptical that gridlock would ease fiscal concerns this time.
US midterm elections are scheduled, with polls suggesting Democrats could take at least one chamber of Congress.
- Midterm election date
- Nov. 3
- Projected outcome
- Democrats are projected to win at least one chamber of Congress from Republicans.
- Veto override
- Democrats are projected to fall short of enough seats to override President Donald Trump’s veto power.
- Federal budget gap
- Roughly 6% of the economy
- Historical yield pattern
- 10-year Treasury yields have been lower on average one and 12 months after midterms producing divided government.