With the 2026 midterm elections two months away, Democrats are odds-on favorites on betting markets to win the House of Representatives, while Republicans hold a narrow edge in the Senate race. A House or Senate flip could reshape the prospects for geopolitics, immigration, judicial confirmations, and more. But what's at stake for the markets? For this week's Barron's Advisor Big Q, we asked four wealth management leaders to tackle that question.

Tom Burt, managing partner and senior portfolio manager, 1280 Financial Partners: The market is really keen on clarity, so regardless of who wins or loses, one question will be answered. If Democrats do win the House and even the Senate-and historically midterm elections are unfavorable for the party in the White House-things are basically going to grind to a standstill. You're going to have a lot more oversight of the administration. I think there will be a big pumping of the brakes of the Trump administration and maybe some of its deregulation. But it's also going to be even more of a dysfunctional government than it currently is. I think that's going to further erode the trust the global economy has in the U.S. and the U.S. dollar, and you'll see a continued weakening of the dollar. You're going to continue to see interest rates relatively high and a selloff in Treasuries.

Rick Wedell, president, chief investment officer, RFG Advisory: Markets react strongly when something unexpected happens, and I think that's particularly true with elections. If markets are generally expecting Democrats to gain control of at least the House and maybe the House and the Senate, but if that doesn't happen, if the Republicans, let's say, maintain control of both houses, I would say the market would react more violently than if the Democrats do gain control. If we end up with divided government as expected, I don't know that the markets are going to swing wildly in one direction or another, because they're already planning on that.

In my mind there are several things markets would be thinking about. One is fiscal policy. We've got a $40 trillion debt and very high deficit spending. I think the market would look at the Democrats as being more concerned about that deficit, and in a divided government, the Democrats potentially looking for ways to close that deficit. I think the bond market would view that as a positive. I think the Republicans are more likely to agree with the administration's view that the solution to this problem is to grow our way out of it. I think the bond market would likely react negatively to that idea. I do think the bond market is more likely to be impacted by the result of the election than the equity markets. The second area of concern is trade and tariffs. The executive branch has control over trade and tariff policy, but Congress can make it difficult for it to implement policy. In a Democratic Congress I think you're likely to see a lot of opposition to the administration's trade agenda, and a Republican-controlled House and Senate would likely offer a lot more support for the trade agenda.

Juan Xavier Sanchez, head of wealth strategy, Activest Wealth Management: The market is assuming a split government in November. Markets usually like a split government because it's harder to pass major laws. That reduces uncertainty, which might be positive for the market. The market right now is following a few things coming from the White House: the tariffs, the conflict with Iran, the deficit. I don't want to say that won't be affected by the midterm elections, but most of those policies are still going to be directed by the White House.

But more important than the election is going to be what comes after it, specifically negotiations on the debt ceiling and the budget discussions, which are going to take place in 2027. Bond yields are going to be very dependent on the debt ceiling discussions. If there's a standoff and those negotiations don't go ahead, there might be more volatility on yields, especially short-term yields. Investors might see a technical default, which could further increase yields.

Mike Mussio, president, FBB Capital Partners: It seems likely that the House is going to flip to Democratic leadership while the Senate is looking less certain. Our base case is divided government. Markets don't mind the gridlock of divided government all that much. On the "con" side for business, we're probably not going to get any major pro-business legislation. But on the "pro" side, you're unlikely to see a big shift in the regulatory regime that would stifle innovation or profitability.

This has been a relatively good year for markets. Usually the midterm year is the worst year of the presidential cycle for markets. It's usually followed by the best, which is the third year. I think the AI data center uproar at the local level may become more and more of a topic in the next 21/2 months. But it will be interesting longer term to see what that stuff yields in terms of policy. If these businesses start getting restrictions on building, that's a little more interesting than whether the Democrats have the House and spend a couple of years with investigations and hearings, which is likely what's going to happen. Markets are kind of indifferent to that.