Elections, Policy, and Portfolio Implications

Elections should be treated as sources of policy divergence and event risk, not as binary market forecasts, so portfolios should be built for resilience across outcomes.

• The next 15 months include the US midterms on November 3, 2026, Spain’s November 2026 snap polls, and 2027 elections in France, Italy, Greece, Nigeria, Argentina, and Poland.
• US midterms mainly create fiscal optionality: divided government would likely limit fiscal change, while continued unified Republican control could produce a wider range of fiscal and interest-rate outcomes.
• In Europe, fragmented parliaments and deviations from fiscal consolidation could raise volatility in the euro, sovereign and corporate bonds, bank debt, and domestic equities as debt-servicing burdens remain elevated.
• AI infrastructure, defense spending, energy security, supply-chain resilience, and technological competitiveness are increasingly driven by national-security priorities and are therefore less sensitive to electoral outcomes.
• The authors favor relative-value and curve strategies over directional duration bets, diversified currency exposures and disciplined options, and equity selection focused on structural beneficiaries rather than companies dependent on subsidies or tax credits.

Takeaway: Investors should map exposures to fiscal, regulatory, competitiveness, and geopolitical risks, hedge genuinely election-dependent positions, and retain flexibility to act once post-election policy becomes clearer.