UBS Outlines Economic Impact of US Midterm Elections on European Markets
UBS warns US midterm elections will not alter global economic trends like trade competition and defense spending, as analysts adjust congressional control probabilities.
UBS Analyzes US Midterm Elections and Impact on Europe
Ahead of the upcoming US midterm elections, the Chief Investment Officer (CIO) at UBS has released new insights regarding key issues shaping the vote, including the economic implications for Europe.
In the latest report titled "US Midterms: What Matters for Europe," Dean Turner, chief Eurozone and UK economist at UBS Global Wealth Management, noted that the midterms are unlikely to alter Europe's structural economic trajectory. Trade competition with China, higher defense spending, and rising fiscal pressures are becoming permanent features of the global economy.
"Together, these forces are reshaping growth, inflation, and bond markets across Europe, generating both opportunities and risks for investors. We believe investors should maintain diversification, prioritize quality assets, and focus on long-term investment themes related to re-armament, industrial resilience, infrastructure investment, and technological leadership," Turner stated.
Scenario Projections and Congressional Balance
In the inaugural report of the "US Election Watch 2026" series, Kurt Reiman, head of fixed income at UBS Global Wealth Management, outlined shifting probabilities for the congressional makeup.
UBS maintains a 50% probability for its baseline scenario—unchanged since May—in which Democrats recapture the House of Representatives while Republicans retain their Senate majority. Meanwhile, the probability of a Democratic sweep of both chambers has risen from 35% to 40%, whereas the likelihood of Republicans retaining control of both houses has dropped from 15% to 10%.
While Democrats remain the frontrunners to win the House, their path to securing a Senate majority remains challenging. They must defend every seat currently held by their party, including tight races in Georgia, Michigan, and New Hampshire, while simultaneously capturing four seats currently held by Republicans across North Carolina, Maine, Iowa, Texas, Alaska, or Ohio.
