RBC Capital Markets strategists Blake Gwinn and Izaac Brook said in a Thursday report that if the Democratic Party takes back both houses of Congress in the midterm elections, US government debt may rise because increased AI regulations may accelerate the market's shift to safe-haven. However, they are less confident about changes in the yield curve under this scenario, as safe-haven purchases may be offset by financial concerns under the Democratic majority. The strategist also refuted the core logic that “the Democratic Party poses a risk to AI transactions”: Trump's pro-AI stance will limit the Democratic Party's influence in Congress, the views of the two parties on AI are divided, and AI regulation is currently concentrated at the state and local levels. If the Democratic Party takes back the House of Representatives and the Republican Party holds the Senate, there may be a moderate rise in US debt driven by risk aversion, increasing pressure on Trump to end the war in Iran, and at the same time eliminating the fiscal risk premium for the remainder of Trump's second term. If the Republican Party holds both houses, it is a tail risk, which may be bad for US debt due to the risk appetite AI background and continued fiscal expansion.

Disclaimer:Webull uses external vendor Google Translation Service for news translations where we endeavour to ensure these are correct, however, we recommend that you please double-check this information accordingly. Webull is not responsible for translation errors or issues.