US Congress: Divided they stand - Westpac

In the recently concluded US midterm elections, President Trump’s Republican colleagues strengthened their hold in the Senate but lost the House for the first time since 2010, notes

Key Quotes

“Looking into 2019, retaking the House allows the Democrats to set the legislative agenda. But deep partisan divide seems likely to ensure many proposals passed by a Democrat-controlled House are blocked by a Republican-controlled Senate before ever reaching the president’s desk. Signature legislation thus faces a tough uphill battle.”

“Trump's agenda is not necessarily crippled but it will certainly face headwinds.”

“The president will retain sweeping powers over trade policy however, meaning the US-China trade war – or perhaps eventual resolution – will not be impacted by Congress.”

“Infrastructure spending is an area long favoured by Democrats and Trump, though they remain very far apart on key details.”

“So it’s a mixed outlook, perhaps overall implying slightly slower growth, lower treasury yields and a weaker dollar. But it surely won’t be enough to stop the Fed hiking not only in Dec but probably 3 times in 2019.”