### POV: SPLIT CONGRESS PRICED IN - Not a...>

US TSYS: ### POV: SPLIT CONGRESS PRICED IN

- Not a lot of trade flow in the lead-up to Tuesday's Midterm elections,

implying markets have priced in/already positioned for a split Congress:

Republicans retaining control of the Senate, while Democrats take control of the

House. 

- Democratic House odds moderating. Prediction market-implied probability of

Democrats recapturing the House had fallen from 66% to 65% (PredictWise, an

aggregator) late last week, while current chances of same outcome have fallen to

0.61% from 0.65% on PredictIt. Non-core results, market reacts: 

- Blue Wave meets Red Wall? If Republicans retain control of both the House and

Senate, risk-on w/ equities rallying markets price in additional stimulus vs. a

sell-off in Tsys as Fed policy normalization gets more aggressive. Caveats:

potential negative trade-war impact on world economy; will the Fed crack under

renewed jawboning from Pres Trump?

- Democrats take control of House and Senate: highly unlikely, but expect vol to

spike either way.