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JPMORGAN US MARKET INTELLIGENCE: 2026 MIDTERM ELECTION BRIEFING

Source Document: J.P. Morgan Data Assets & Alpha Group (Andrew Tyler et al.)

Publication Date: September 30, 2026

THE TAKE: BLUE WAVE ODDS SURGE TO 62% AS MAP EXPANDS; GRIDLOCK REMAINS BULLISH

JPMorgan US Market Intelligence reports a sharp shift in midterm betting probabilities. Driven by President Trump’s declining approval ratings (37% in recent WSJ polling—the lowest for an incumbent president entering midterms since 1990) and acute voter anxiety over cost-of-living/affordability, betting market probabilities (Kalshi/Bloomberg) now reflect a 62% likelihood of a "Blue Wave" (Democrats winning both the House and the Senate), up from 52% two weeks prior.

Despite increasing probabilities of a Democratic Congress, JPM Market Intelligence views the market impact as neutral-to-constructive. A Democratic Congress would lack the two-thirds supermajority required to override presidential vetoes, resulting in legislative gridlock similar to the final two years of the Obama, Trump 1.0, and Biden administrations. Historically, political gridlock has been associated with strong equity performance (+20% average SPX return under gridlock over a 2-year Congressional term since 1950). JPM explicitly advises investors against de-risking portfolios due to Blue Wave fears and recommends buying any election-related dips.

ELECTION ODDS & CONGRESSIONAL MAP BREAKDOWN

  • Senate Control Dynamics:

    • Current Margin: GOP holds a 53–47 majority.

    • Democratic Path: Democrats need a net gain of 4 to 5 seats for control (or 6 depending on Sen. Fetterman's caucus role).

    • Key Toss-Up States (9): Alaska, Iowa, Kansas, Maine, Michigan, Minnesota, Nebraska, Ohio, and Texas.

    • Democrat Leads (Polled & Betting): Democrats lead in 6 battleground states: Alaska (71% win prob), Maine (60%), Michigan, Ohio (61%), Texas (61%), and North Carolina (95%).

    • GOP Leads: Republicans maintain leads in Iowa (59%), Kansas, and Nebraska. Georgia and New Hampshire have moved out of battleground status due to widening Democratic leads.

  • House Control Dynamics:

    • Cook Political Report ("CPR") rates the House as a "done deal" for Democrats. CPR projects 197 seats Lean/Likely Dem vs. 195 Lean/Likely GOP, with 22 toss-ups (16 currently held by Republicans).

  • Fundraising Disparity:

    • Senate Candidates: Democrats have raised $585.2M vs. $336.9M for Republicans. Top fundraisers: Jon Ossoff ($98.0M) and James Talarico ($68.6M).

    • House Candidates: Democrats have raised $1,009.5M vs. $814.9M for Republicans.

SCENARIO ANALYSIS & JPM DELTA 1 TRADE IDEAS

JPMorgan’s Delta 1 strategy team (Kaitlyn Bowman, Priyanka Thapa, Manish Sinha) has structured optimized long/short basket pairs to trade election probabilities:

1. Democratic Congress (Implied Probability: 62%) — Basket Pair: JPMDC26P

  • Long Leg (JPMDC26L):

    • ACA Exchange Levered (JPUSACA): High probability of extending enhanced ACA premium tax credits, benefiting exchange-exposed MCOs and hospitals.

    • Low-End Consumer Spend (JP1XLOCD): Increased odds of targeted fiscal support and affordability programs aiding lower-income discretionary spending.

  • Short Leg (JPMDC26S):

    • Next-Gen Defense (JP1XNXDF): SMID-cap defense (drones, space, missile defense) faces budget risk under Democratic spending caps.

    • Capital Markets Exposed (JPUSCAPM): Regulatory easing fades as congressional oversight and investigations surge.

    • Energy Permitting (JPAMPERM): Permitting reform stalls, extending approval timelines for domestic projects.

    • CLARITY Act Exposed (JPUSCLAR): Removes likelihood of digital asset market-structure legislation passing.

2. Split Congress (Implied Probability: ~30.4%) — Basket Pair: JPMSC26P

  • Long Leg (JPMSC26L): ACA Exchange Levered (JPUSACA) and Traditional Defense (JP2DEF—bipartisan support for major prime contractors).

  • Short Leg (JPMSC26S): Capital Markets Exposed (JPUSCAPM—headwinds from heightened House investigation/oversight).

3. Republican Congress (Implied Probability: 8%) — Basket Pair: JPMRC26P

  • Long Leg (JPMRC26L): Next-Gen Defense (JP1XNXDF), US Manufacturing & Supply Chain (JPRAMANS), Capital Markets (JPUSCAPM), Energy Permitting (JPAMPERM), and CLARITY Act (JPUSCLAR).

  • Short Leg (JPMRC26S): ACA Exchange Levered (JPUSACA) and Low-End Consumer Spend (JP1XLOCD).

TOP VOTER ISSUES & CANADA TARIFF OVERHANG

  • Voter Priorities: The Economy and Affordability remain the dominant issues (29% economy / 15% cost-of-living), followed by Government Ethics (9%), Immigration (7%), and Healthcare (5%).

  • Canada Trade Tension Impact on Midterms: Canada is the top export destination for 26 US states. Trade disputes and Canadian retaliation tariffs heavily expose key Senate battleground states—specifically Maine (most vulnerable state, >20% export exposure), Ohio, Iowa, and North Carolina—creating an additional electoral drag for incumbent Republicans in border and manufacturing regions.

  • Voter Fraud Fact-Check: Proven voter fraud incidents sit at less than 0.0001% across 1.25 billion ballots cast since 1980. JPM notes that the statistical probability of voter fraud altering a federal election outcome is equivalent to "being struck by lightning twice".