SCB FM: Democrats Seen Sweeping US Congress, Fiscal Talks to Drive Baht
SCB Financial Markets predicts Democrats will likely win both chambers of the US midterm elections, an outcome markets have already largely priced in. The firm says near-term market impact will be limited, but the baht and bond yields will be driven by post-election fiscal negotiations. SCB FM forecasts the baht at 33.60–34.10 per dollar for the rest of 2026, potentially weakening to 34.50 by mid-2027, with US and Thai 10-year yields projected to decline gradually.
SCB Financial Markets (SCB FM) assesses that the Democratic Party is likely to win both chambers in the US midterm elections, but the short-term impact on financial markets may be limited because the market has largely priced in this outcome. Medium- to long-term direction will depend on negotiations between the two parties on new measures, which will affect the US fiscal position. If both parties compromise and increase government spending, fiscal risks could rise, supporting US Treasury yields and the dollar while pressuring the baht to weaken. Conversely, if policymaking stalls, fiscal risks may ease, causing bond yields and the dollar to soften.
SCB FM expects the baht to trade in a range of 33.60–34.10 per dollar for the remainder of this year and potentially weaken to 34.50 per dollar by mid-2027. Government bond yields are seen edging lower in the near term, with the US 10-year yield projected at 4.95–5.15% by end-2026 and 4.70–4.90% by end-2027. The Thai 10-year yield is forecast at 2.00–2.20% and 1.80–2.00% for the same periods.
Patrick Pulea, Head of Financial Markets Function at Siam Commercial Bank, estimates a roughly 95% chance of Democrats taking the House and a 75% chance of winning the Senate. He notes that if this scenario materializes, the immediate impact on the dollar index, US Treasury yields, and the baht would be limited because markets have already priced it in. However, the election outcome will influence medium- to long-term market trends, with the key factor being the government's policy direction and its effect on the fiscal deficit — a primary market concern over the past two to three months amid record-high public debt, which triggered a sell-off in US Treasuries, a sharp rise in bond yields, and a temporary dollar decline before the currency strengthened again on higher yields.
Pulea adds that a Democratic sweep of both chambers could make it easier to pass legislation and implement policies compared to a split government. Nevertheless, Republicans could still use the filibuster to block policy votes, and President Trump could veto Democratic initiatives. He outlines two scenarios: 1) If both parties compromise and allow each other's flagship policies — such as Democrats increasing health spending and Republicans boosting defense spending — this could widen the deficit. 2) If gridlock prevails, fiscal restraint may persist.
