As the likelihood of a Democratic victory in the U.S. midterm elections increases, the dollar has strengthened and Treasury yields have risen. Expectations are growing regarding changes in tariffs and energy policies under the Trump administration, but strong U.S. economic indicators and inflation pressures from the Middle East conflict are adding uncertainty to the financial markets.
According to the International Financial Center on November 4, prediction markets Kalshi and Polymarket indicate a 94-95% probability of a Democratic win in the House of Representatives, with a 76-77% chance of controlling both chambers. Harvard University's election model also suggests a 96% likelihood of a Democratic victory in the House. If the Democrats secure a majority in Congress, it is anticipated that tariff pressures from the Trump administration will ease and changes in energy and industrial subsidy policies may occur.
However, stronger-than-expected U.S. economic indicators have led to rising Treasury yields. Job openings in the U.S. for September reached 7.523 million, an increase of 333,000 from the previous month, surpassing market expectations of 7.1 million. New manufacturing orders also rose by 1.8% compared to the previous month, exceeding the forecast of 1.2%. As a result, the yield on the 10-year Treasury note rose by 5 basis points to 4.96%.
The dollar index increased by 0.12% to 101.87. The value of the yen fell by 0.47% to 158.69 yen per dollar. The New York won-dollar exchange rate rose by 4.0 won to 1,345.0 won compared to the closing price in the Seoul foreign exchange market. Meanwhile, the U.S. Standard & Poor's (S&P) 500 index closed up 0.36% at 7,568.9, driven by bargain buying in semiconductor stocks.
Market analysts believe that the situation in the Middle East will continue to be a significant variable even after the midterm elections. With rising expectations for negotiations between the U.S. and Iran, Brent crude prices have fallen more than 11% from recent highs. The price was recorded at $103.60 per barrel, down 1.12% from the previous trading day. However, concerns about supply disruptions due to the prolonged conflict remain, suggesting continued volatility in energy prices.
If rising energy prices stimulate inflation, major economies may face increased pressure for monetary tightening. With U.S. Treasury yields nearing 5%, the direction of policy changes following the midterm elections and the ongoing Middle East conflict are expected to influence the dollar and global financial market volatility.
* This article has been translated by AI.
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