Trump Under Pressure Ahead of US Midterms; Maybank Tips Split Congress
Octopaul AI ·
Maybank’s FX research team outlines a base-case scenario in which Democrats regain the House of Representatives while Republicans retain the Senate following the November 3 US midterm elections. In its October 28 report, the team argues that the outcome could reshape expectations for fiscal spending, interest rates and AI investment. Under this scenario, initial dollar weakness could prove temporary, while the ringgit is expected to remain resilient.
Inflation and Falling Approval Ratings Challenge Republicans
Maybank believes elevated oil prices could intensify inflation pressures and weaken the electoral outlook for Trump and the Republicans. The report cites YouGov data as of October 12 showing that 34.3% of registered US voters ranked inflation and prices as the country’s most important issue. Citing RealClearPolitics, the team also notes that Trump’s approval rating was below both his first-term level and Biden’s rating at comparable stages of their presidencies.
Polymarket data cited in the report put the probability of Democrats reclaiming the House and securing a Senate majority at 92% and 62%, respectively. These are prediction-market probabilities rather than voter approval ratings. The Senate pricing also differs from Maybank’s base case that Republicans retain control.
Three Election Scenarios
1. Republicans retain both chambers
Maybank expects limited immediate change to the dollar’s supportive backdrop, with elevated oil prices and Treasury yields providing support. However, further tax cuts and deficit-financed spending could increase borrowing requirements and inflation concerns. Over time, deteriorating fiscal confidence could weigh on the dollar despite its interest-rate advantage.
2. Democrats take the House; Republicans retain the Senate — Base Case
A divided Congress could constrain fresh fiscal stimulus. Reduced spending expectations and a potentially earlier resolution of the Iran conflict could lower oil prices and Treasury yields, initially weakening the dollar. Over the medium term, fiscal restraint, continued AI investment and relatively restrictive Federal Reserve policy could restore support for the currency.
3. Democrats take both chambers
Maybank expects stronger constraints on Trump’s legislative agenda and appointments. The dollar could initially soften, but improved confidence in Fed independence, institutional checks and fiscal discipline could support it over the medium term. Greater scrutiny could dampen AI-related sentiment, although the team does not expect congressional changes to derail the broader investment cycle.
Implications for Bonds, Stocks and Gold
Maybank views its divided-Congress scenario as modestly supportive of US Treasuries as yields could decline. The implications for equities are mixed: lower yields could support valuations, while greater scrutiny of AI businesses could weigh on sentiment. An eventual decline in oil prices could also support gold.
Nevertheless, the team expects tariff uncertainty to persist across election outcomes, as a change in congressional control would not eliminate Trump’s influence over trade policy.
Ringgit Resilience, with Gradual Appreciation
Maybank maintains a neutral view on the ringgit around the elections, supported by strong external balances, AI-related exports and Malaysia’s net oil-and-gas exporter position. Further appreciation would depend importantly on a softer dollar.
Its forecasts place USD/MYR at 4.05 in 4Q26 and 1Q27, gradually declining to 3.95 by 4Q27, pointing to gradual ringgit strengthening rather than a sharp election-driven rally.
Malaysian Bonds and Technology Exports in Focus
Beyond the dollar, Maybank identifies US Treasury yields as an important influence on the ringgit, noting that foreign investors held approximately 33.6% of Malaysian government securities at end-2Q26. Malaysia’s exposure to AI-related exports also makes the currency sensitive to changes in the investment cycle.
Although the team does not expect the midterms to derail AI spending, semiconductor and electronics exports remain exposed to US trade-policy uncertainty across election outcomes.
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