Midterms will split Congress; Fed on hold until Dec.

The betting odds suggest that there are few uncertainties surrounding the broad outcomes of Tuesday’s midterm elections, with the Democrats likely to win control of the House while the Republicans maintain a majority in the Senate. That is most likely to lead to legislative gridlock, but wouldn’t necessarily weigh on the markets or real economic growth. Meanwhile, we don’t expect any major changes to the Fed’s policy statement following next week’s FOMC meeting, as officials appear happy with the plan to continue gradually raising interest rates.