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Senior Market Analyst
Gasoline prices at a record high and a rising cost of living have polls pointing against President Trump's party in the U.S. midterm elections. Bank and crypto regulation hinges on which party controls Congress after the vote, with tighter rules on banks, crypto and tech stocks under the Democrats and lighter rules under a Republican sweep. The Democrats are expected to take the House of Representatives, while the Senate is a much closer call. A Democratic House alongside a Republican Senate points to gridlock, leaving the regulatory path for those sectors largely where it is.
Fiona Cincotta, StoneX Senior Market Analyst, covers macroeconomics, forex, equities, commodities and crypto assets across U.S., U.K. and European markets. That coverage gives insight into how the balance of power in Congress feeds through bank and crypto regulation into U.S. growth, Treasury yields and the U.S. dollar.
Tighter regulation on banks, crypto and tech stocks is the main policy risk tied to Democratic control of Congress, with the potential to slow U.S. growth. Markets go into the vote with a clear starting point. According to Cincotta, "expectations are that the Democrats will take the House of Representatives from the Republicans". Slower growth in that scenario points to lower Treasury yields and a weaker U.S. dollar, linking a sector-level policy shift to cross-asset pricing. Conversely, a Republican sweep points to less regulation alongside tariffs and inflationary pressure, which could lift Treasury yields and Federal Reserve rate hike expectations.
"I think perhaps the most market friendly vote would actually be the Democrats taking the House of Representatives and the Republicans keeping the Senate," Cincotta says. A divided Congress, with a Democratic House and a Republican Senate, stalls the regulatory agenda for banks, crypto and tech stocks in either direction. That split, she adds, means "there will be gridlock and likely to have little progress". As a result, the regulatory status quo for banks, crypto and tech stocks stays largely intact, limiting the policy-driven growth risk tied to the other outcomes.
--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: Fiona Cincotta, StoneX Senior Market Analyst
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Bank and crypto regulation rides on which party controls Congress after the U.S. midterm elections. A split between a Democratic House and a Republican Senate points to gridlock that keeps tighter rules on banks, crypto and tech stocks on hold.
Bank and crypto regulation rides on which party controls Congress after the U.S. midterm elections. A split between a Democratic House and a Republican Senate points to gridlock that keeps tighter rules on banks, crypto and tech stocks on hold.
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