Citi said U.S. equities could face increased political risk ahead of the Nov. 3 midterm elections, with historical patterns pointing to weaker performance into the vote followed by a recovery as election uncertainty fades. The bank said midterm election years have historically produced the weakest equity performance of the four-year presidential cycle, and it expects an election-related risk premium to build before voting, typically beginning about 50 business days ahead of the election and peaking in the weeks before it. Citi's analysis suggests the main equity impact could come from uncertainty rather than the election result itself, with stocks historically selling off ahead of midterms before staging a relief rally into year-end regardless of the eventual outcome. A shift toward divided government could also affect markets through fiscal policy expectations, as divided Congresses have historically been supportive for bonds because political gridlock reduces expectations for major fiscal stimulus or sweeping legislation. The bank cautioned that the current cycle has additional complications, including a large U.S. fiscal deficit and debt-ceiling negotiations expected in 2027, which could limit how much historical election patterns translate into market moves this time.
Citigroup Inc.Citi's own research warns midterm political risk could weigh on equities before a year-end rally, but the note is a market call, not a company-specific development.
Bank of Chongqing Co Ltd