US Fiscal Outlook Remains Investor Concern Ahead of Midterms

MT Newswires Live10-31 06:37

The US fiscal outlook is expected to remain a concern for investors regardless of the outcome of next week's midterm elections, with the budget deficit projected to stay around 6% of gross domestic product, Reuters reported Friday.

A Democratic win could constrain additional tax cuts and lead to spending compromises, potentially supporting Treasuries and the dollar. However, rising entitlement costs and interest payments are expected to keep borrowing needs elevated, Reuters said.

Investors also flagged the risk of debt-ceiling clashes, particularly if Congress is split, which could complicate spending negotiations and raise the risk of a prolonged funding standoff, the report said.

Separately, Congress faces a Dec. 11 deadline to reach an agreement on fiscal 2027 government funding. The debt ceiling is not expected to become an immediate issue until late 2027, the report said.

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