The key points are:
Democrat wins in the US midterms signal: Trumpism has peaked; Congress will now be a check on him; more regulation on AI; a return to debt ceiling brinkmanship; the risk Trump refocuses on foreign policy including the War and tariffs; and fears of tax hikes and bigger government.
The blue wave is probably negative for bonds, ambiguous for shares with correction risk remaining but the 6-12-mth outlook looking okay and a small negative for crypto.
For Australia, a risk is a renewed Trump focus on disruptive foreign policy in the near term (tariffs and/or War) but this should recede as Trump’s power wanes.
Lower oil prices reduce the chance of another rate hike, but our view remains for RBA to be on hold out to late next year. Further falls in consumer and business confidence are also consistent with the RBA having now down enough in terms of rate hikes.
