Janus Henderson: Midterms matter - just less so at 8% inflation

Janus Henderson: Midterms matter - just less so at 8% inflation

November 10, 2022

United States Politics
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Jim Cielinski, Global Head of Fixed Income at Janus Henderson, comments on the impact of this year’s U.S. midterm elections on the financial markets:

To be sure, the fiscal side of things will not be completely benign. Congress will need to raise the federal debt limit sometime in 2023, and Republicans could force spending cuts or refuse bipartisan action, creating volatility for markets. (In 2011, under a Republican House and Democratic Senate, a debt ceiling debate led to the most volatile week of trading for financial markets since the 2008 Global Financial Crisis.)

But the gridlock that is likely to settle over Washington for the next two years means that the variables buffeting investors lately – from generationally high inflation and rapidly rising rates to shrinking corporate earnings and geopolitical tensions – will likely continue to dominate the near-term direction of markets.

In other words, even if the midterms change the balance of power in Washington, the biggest issue for investors remains inflation and how the Fed’s response will impact economic growth and corporate earnings.

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