Hakyung Kim reports that the 10-year Treasury yield has held steady around 5.25 per cent, with stocks steady and gold catching a bid. The US midterm elections are a little over a month away; Republicans currently control both chambers, but consensus holds that Democrats will retake the House while Republicans keep the Senate, with Kalshi pricing in a clean Democratic sweep. Gregory Daco of EY-Parthenon notes that a split Congress tends to limit fiscal action unless a recession forces bipartisan support.

If Republicans lose unified House control, a defence-focused reconciliation bill could pass before the new Congress is sworn in, with President Donald Trump requesting $350bn — roughly 0.3 per cent of GDP annually, per Elias Haddad of Brown Brothers Harriman, unlikely to shift Fed rate expectations. A Republican sweep could produce a reconciliation bill exceeding $1tn, with Trump's $5,000 per adult payouts alone costing $1.3tn, which Michael McLean at Barclays says would support growth, pressure rates higher, and create the most risk-on outcome for credit. Full Democratic control recalls 2006, when fiscal policy loosened alongside Fed rate cuts, though that comparison is imperfect without an imminent crisis.