Divided Government After the Democratic Sweep: What Blue-Wave Control of Congress Means for Fiscal Policy, Tariffs, the Debt Limit and the Curve

Democrats swept Congress in Tuesday's midterms, and the macro deck is being reshuffled into a regime markets had not fully priced. AP projects Democratic control of the Senate, confirmed overnight, and ABC projects enough House seats to flip that chamber as well, a blue wave in the Nov 3 elections that hands both chambers of Congress to one party while a Republican occupies the White House. For the economy and the rates complex, that means every fiscal and trade assumption built into the 2026 growth-and-earnings discount now runs through a divided government: a Democratic Congress against a Republican administration, with fiscal expansion, tariff policy and the debt-limit calendar all enteri…