US Midterms (8 days out): Democrats’ early-vote lead narrows in 7 states; Texas and Nebraska flip to Republicans

SUMMARY On November 3rd, voters head to the polls to decide 35 Senate seats, all 435 House seats, 36 governorships, and public utility commissioners in 9 states. Midterm elections, which take place two years into a presidency, are viewed as a referendum on the ruling party’s handling of key issues. 35/100 Senate seats are up for election, of which 22 are held by Republicans and 13 by Democrats. The current balance of power in the Senate favours the Republicans, who have 53 seats to the Democrats’ 45, with two Independents caucusing with the Democrats. **Polls show the Senate race remains close, with the majority of key races in Republican-held seats, leaving the party vulnerable (Alaska, Iowa, Kansas, Maine, Ohio, Texas, and North Carolina). Polymarket prices a 65% chance of the Democrats winning the Senate, which would require a net gain of 4 seats.  All 435 House of Representatives seats are up for election, and the Democrats are widely expected to take a majority, which markets price at 92%. Republicans currently hold a slim majority in the House, with 218 seats to the Democrats’ 214, plus one Independent and two vacancies. Balance-of-power betting odds have increasingly favoured a Democratic sweep, following President Trump’s declining approval ratings amid an Iran war that has weighed on the cost of living for Americans through higher diesel and gasoline prices. Polymarket odds of congressional outcomes are as follows: Democratic sweep (66%); Democratic House and Republican Senate (26%); and Republican sweep (8%). Extra focus will be on gubernatorial and Public Utility Commission (PUC) commissioner elections, as near-term data-centre policy is likely to be set at the state level. Gubernatorial elections will take place in 36 states: 18 Democratic-held and 18 Republican-held. Traders will be attentive to the gubernatorial races for any potential change in stance on the AI trade at either state or federal level. Recent developments: Trump is swapping some Canadian goods on the Section 338 tariff list: plywood, some paper, machinery, refrigeration equipment and packing crates come off; valves, carpets, waste products and others go on. The WSJ reports the exemptions were requested by Sen. Susan Collins, who is in a tight re-election race in trade-dependent Maine; they could also help Republicans like Mike Rogers in Michigan and John Sununu in New Hampshire, who have criticised the Canada tariffs. The Trump administration is suing to block certification of Alaska’s Senate election if Republican Sen. Dan Sullivan loses to Democrat Mary Peltola, arguing votes may have been mistakenly cast for a second candidate, Daniel J. Sullivan. That said, Attorney General Todd Blanche said the department isn’t trying to stop any ballots or certification, only to preserve ballots so Alaska officials can determine whether voters were misled, adding that the suit relied solely on federal law and wasn’t coordinated with any campaign. On Friday, the UoM October report showed consumer sentiment held steady this month; year-ahead business conditions improved about 14% but remain 16% below last October; the decline in current conditions was driven by durables buying conditions, which plunged 18% on higher interest rates and affordability concerns; sentiment is 10% below a year ago and 15% below February, prior to the Iran war. Trump said Audi has committed USD 4.2bln in Macon to begin construction next month on a plant producing 200,000 cars a year, with Trump aiming to boost Georgia Republicans in a tight race. Audi said the plant, its first in Georgia, would create about 4,500 jobs, with construction starting in 2027 and production in the early 2030s. Early Voting in Key Senate Races (NBC/TargetSmart - October 26th) National: 28,942,282 early ballots cast (14.7mln by mail, 14.2mln in person). Democrats lead Republicans 47%–35% (+12), leaving Other at 18%; Mail ballots requested or sent (57.82mln): 46%–31% (D+15), with Other at 23%. Senate battlegrounds via NBC (AK, GA, IA, KS, ME, MI, NC, NH, OH, TX): 10,182,973 early ballots cast (2.3mln by mail, 7.9mln in person). Democrats lead Republicans 47%–40% (+7); Mail ballots requested or sent (4.12mln): 50%–37% (D+13). Since Friday, the Democratic lead has narrowed in seven states, most sharply in Kansas (D+13 to D+7), with Texas and Nebraska flipping to Republican leads. It widened only in Minnesota. In five states (Iowa, Maine, Michigan, Minnesota, Ohio), Democrats' lead among ballots cast is wider than their lead among mail requests, pointing to faster Democratic returns. Nebraska stands out: Republicans lead requests by 10 but lead ballots cast by just 1. Texas runs the other way: Democrats lead mail requests by 9, but Republicans lead ballots cast by 2, as almost all of the state's early vote is in person. The figures below show who has voted, not how. Democrats typically lead early, and the gaps usually narrow as Republicans vote later in person and on Election Day.