{"id":11974,"date":"2026-09-09T16:27:35","date_gmt":"2026-09-09T20:27:35","guid":{"rendered":"https:\/\/www.guardiancapital.com/investmentsolutions\/?post_type=insight&p=11974"},"modified":"2026-10-01T14:17:12","modified_gmt":"2026-10-01T18:17:12","slug":"viewpoint-midterm-study-notes","status":"publish","type":"insight","link":"https:\/\/www.guardiancapital.com/investmentsolutions\/insights\/viewpoint-midterm-study-notes\/","title":{"rendered":"Viewpoint: Midterm study notes"},"content":{"rendered":"

Midterm study notes<\/strong><\/h2>\n

The U.S. Midterm elections are eight weeks from today, and I thought it would be a good time to share some thoughts about the imminent vote and what history says about its implications for markets.<\/p>\n

The Midterms \u2014 which include contests for all 435 seats in the House of Representatives and 35 seats in the Senate (33 regular votes plus two special elections in Ohio and Florida), but not the Presidency \u2014 are typically viewed as a referendum on the sitting president. Therefore, the general popularity of the Commander in Chief carries some significance for the results of the President\u2019s party.<\/p>\n

The latest public opinion poll data compiled by The American Presidency Project\u00b9 show that 35% of Americans \u201capprove\u201d of the job the President is doing \u2014 the approval rating has been steadily falling from its high of 47% when the President returned to the White House in January of last year \u2014 while 61% \u201cdisapprove\u201d. Putting this into some historical context, that -26 percentage point \u201cnet approval\u201d rating is the lowest gauge of Presidential popularity at this juncture before a Midterm election on record (data back to 1942).\u00a0<\/strong><\/p>\n

U.S. presidential net approval ratings eight weeks before midterms
\n<\/strong>(percent \u201capproving\u201d less \u201cdisapproving\u201d)<\/p>\n

\"Graph<\/p>\n

* Truman and Ford were not elected but instead assumed Office before these midterm elections; source: Guardian Capital LP, based on data from <\/em>The Presidency Project<\/em><\/a><\/p>\n

The President\u2019s party typically loses seats in both the Senate and House of Representatives in the Midterms \u2014 the last 21 of these elections have seen the party in power lose four seats in the Senate and 27 in the House (both on average and median). Historically, the losses have tended to be more significant the lower the President\u2019s approval has been ahead of the election.<\/p>\n

Change in Congress in Midterms by approval rating seven weeks before Election<\/strong><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
President<\/th>\nNet Approval (ppt)<\/th>\nChange in President’s Party’s Seats<\/th>\n<\/tr>\n
Senate Seats<\/th>\nHouse Seats<\/th>\n<\/tr>\n<\/thead>\n
Ford (1974)*<\/td>\n68<\/td>\n-4<\/td>\n-49<\/td>\n<\/tr>\n
H.W. Bush (1990)<\/td>\n60<\/td>\n-1<\/td>\n-8<\/td>\n<\/tr>\n
Roosevelt (1942)<\/td>\n58<\/td>\n-9<\/td>\n-47<\/td>\n<\/tr>\n
Eisenhower (1954)<\/td>\n48<\/td>\n-2<\/td>\n-19<\/td>\n<\/tr>\n
Kennedy (1962)<\/td>\n47<\/td>\n4<\/td>\n-1<\/td>\n<\/tr>\n
W. Bush (2002)<\/td>\n37<\/td>\n2<\/td>\n8<\/td>\n<\/tr>\n
Reagan (1986)<\/td>\n34<\/td>\n-8<\/td>\n-5<\/td>\n<\/tr>\n
Eisenhower (1958)<\/td>\n29<\/td>\n-15<\/td>\n-49<\/td>\n<\/tr>\n
Clinton (1998)<\/td>\n27<\/td>\n0<\/td>\n5<\/td>\n<\/tr>\n
Nixon (1970)<\/td>\n23<\/td>\n1<\/td>\n-12<\/td>\n<\/tr>\n
Truman (1950)<\/td>\n11<\/td>\n-5<\/td>\n-28<\/td>\n<\/tr>\n
Johnson (1966)<\/td>\n8<\/td>\n-3<\/td>\n-47<\/td>\n<\/tr>\n
Carter (1978)<\/td>\n2<\/td>\n-3<\/td>\n-15<\/td>\n<\/tr>\n
Truman (1946)*<\/td>\n-2<\/td>\n-12<\/td>\n-55<\/td>\n<\/tr>\n
Obama (2010)<\/td>\n-7<\/td>\n-6<\/td>\n-63<\/td>\n<\/tr>\n
Reagan (1982)<\/td>\n-8<\/td>\n-1<\/td>\n-26<\/td>\n<\/tr>\n
Obama (2014)<\/td>\n-8<\/td>\n-9<\/td>\n-13<\/td>\n<\/tr>\n
Biden (2022)<\/td>\n-9<\/td>\n1<\/td>\n-27<\/td>\n<\/tr>\n
W. Bush (2006)<\/td>\n-12<\/td>\n-5<\/td>\n-31<\/td>\n<\/tr>\n
Clinton (1994)<\/td>\n-13<\/td>\n-8<\/td>\n-54<\/td>\n<\/tr>\n
Trump (2018)<\/td>\n-13<\/td>\n2<\/td>\n-41<\/td>\n<\/tr>\n
Trump (2026)<\/strong><\/td>\n-26<\/strong><\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n


\n* Truman and Ford were not elected but instead assumed Office before these midterm elections; source: Guardian Capital LP, based on data from <\/em>The Presidency Project<\/em><\/a><\/p>\n

The Republicans currently have majorities in both chambers of Congress, holding 53 of 100 Senate seats and 219 (218 plus 1 aligned Independent) of the 435 seats in the House of Representatives. Looking at the (fairly loose) historical relationship between approval ratings this far out from the Midterms and the President\u2019s party Midterm election performance, the current net approval rating would be consistent with the Republicans losing five seats in the Senate and 38 in the House (red dots in the charts below) \u2014 this would suggest the Republicans could lose control of both chambers of Congress.<\/p>\n

Change in Congress in Midterms by Approval Rating Two Weeks Before Election<\/strong><\/p>\n

\"\"<\/p>\n

Source: Guardian Capital LP, based on data from <\/em>The Presidency Project<\/em><\/a><\/p>\n

This is generally consistent with current betting markets<\/a>\u00b2<\/sup>, which are putting the highest odds on an outcome in which Democrats end up with control over the House and Senate (52%); Republicans retaining the Senate but losing the House has the second-highest odds at the moment (35%).<\/p>\n

Predicted balance of power after 2026 Midterm elections<\/strong><\/p>\n

\"\"<\/p>\n

Source: Guardian Capital LP, based on data from <\/em>Polymarket<\/em><\/a> to September 8, 2026 <\/em><\/p>\n

For their part, polling-based models, such as those constructed by The Economist, give a high probability of Democrats taking the House<\/a> (seeing a net increase of 22 seats to 236) and a very slight edge in gaining control of the Senate<\/a> (adding four seats to hit 51).<\/p>\n

From a policy perspective, a split or Democrat-controlled Congress likely means gridlock in Washington, as significant pushback will be expected against whatever legislation the President tables \u2014 that would not likely help reduce the elevated policy uncertainty<\/a>\u00b3<\/sup> that has characterized this Presidential term. Recent history indicates that more tends to get done when Congress is fully aligned with the President than when there is division.<\/p>\n

Bills enacted into law by Congress during Congressional Session <\/strong>(number)<\/p>\n

\"\"<\/p>\n

Source: Guardian Capital LP, based on data from <\/em>GovTrack<\/em><\/a> to September 4, 2026 <\/em><\/p>\n

Looking at markets, history shows that the year following a Midterm election has been good for investors \u2014 though the causation versus correlation is clearly up for debate.<\/p>\n

The S&P 500 Composite Price Index4<\/sup> has been up following each one of the 20 Midterm elections of the post-World War II era, with the average increase being 15% (median 14%) \u2014 that represents a notable outperformance relative to the year before the Midterm, where the average increase has been 3% (median 4%) and eight of 20 years recorded declines (average and median -15%). For added reference, the S&P 500 is up 12% since the start of last November; previously, when the U.S. benchmark was up at least 12% before the midterms, it rose a further 12% on average over the next year.<\/p>\n

S&P 500 performance in 12 months before and after U.S. Midterm Election <\/strong>(percent)<\/p>\n

\"\"<\/p>\n

Source: Guardian Capital LP, based on data from The Presidency Project and Bloomberg to September 4, 2026 <\/em><\/p>\n

Of these 20 previous Midterms, there have been 13 previous instances in which the President\u2019s party had control of both the House and Senate going into a Midterm. In eight of these, the President\u2019s party lost at least one chamber of Congress (1946, 1954, 1986, 1994, 2006, 2010, 2018 and 2022), while they have retained control five times (1950, 1962, 1966, 1982, and 2002); Congress was not aligned heading into the other seven elections.<\/p>\n

The best market outcomes have been when the President\u2019s party retains power, with the average increase in the S&P 500 over the year following the election being +18%. When the President loses at least one chamber, that performance falls to a still solid average of +12% \u2014 and the S&P 500 has increased by an average of 14% in the year following the other Midterms in which the Presidency and Congress were not unified heading into the election.<\/p>\n

S&P 500 performance in 12 months after U.S. Midterm Election <\/strong>(percent)<\/p>\n

\"\"<\/p>\n

Source: Guardian Capital LP, based on data from The Presidency Project and Bloomberg to September 4, 2026<\/em><\/p>\n

In terms of the bond market, looking at the last 16 Midterm elections (daily bond market data is only readily available since 1962), the 10-year U.S. Treasury note yield has changed only negligibly on average in the 12 months following the election (+6 basis points average). That said, when the President\u2019s party loses at least one previously held chamber of Congress, the 10-year yield declined over the next year by an average of 36 basis points; it increased by an average of 56 basis points when the President\u2019s party has retained power in Congress \u2014 a possible indication that markets typically view a fully aligned U.S. federal government as one that is willing to spend more freely to the detriment of fiscal balances.<\/p>\n

Change in 10-year U.S. Treasury note yield in 12 months after U.S. Midterm Election <\/strong>(basis points)<\/p>\n

\"\"<\/p>\n

Source: Guardian Capital LP, based on data from The Presidency Project and Bloomberg to September 4, 2026 <\/em><\/p>\n

_____________
\nDavid Onyett-Jeffries<\/strong>
\nDavid Onyett-Jeffries is Vice President, Economics & Multi Asset Solutions, at Guardian Capital LP (GCLP). He provides macroeconomic guidance to GCLP and its affiliates. Additionally, he is a portfolio manager of GCLP’s multi-asset portfolios and funds and works closely with GCLP’s Directed Outcomes team.<\/em><\/p>\n

\u00b9 The American Presidency Project, Statistics, Data, Presidential Job Approval–All Data, September 8, 2026, https:\/\/www.presidency.ucsb.edu\/statistics\/data\/presidential-jobapproval-all-data<\/a><\/p>\n

\u00b2 Polymarket, Politics, US Election, Balance of Power: 2026 Midterms, September 8, 2026, https:\/\/polymarket.com\/event\/balance-of-power-2026-midterms<\/a><\/p>\n

\u00b3 Economic Policy Uncertainty, US Monthly EPU Index (1900-present), September 8, 2026, https:\/\/policyuncertainty.com\/us_monthly.html<\/a><\/p>\n

4<\/sup> The S&P 500 is an index of 500 stocks designed to reflect the risk\/return characteristics of the large-cap US equity universe.<\/p>\n

This commentary is for general informational purposes only and does not constitute investment, financial, legal, accounting, tax advice or a recommendation to buy, sell or hold a security. It shall under no circumstances be considered an offer or solicitation to deal in any product or security mentioned herein. It is only intended for the audience to whom it has been distributed and may not be reproduced or redistributed without the consent of Guardian Capital LP. This information is not intended for distribution into any jurisdiction where such distribution is restricted by law or regulation.<\/strong><\/p>\n

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Published: September 9, 2026<\/p>\n