A Much Too Early Look at the 2026 and 2028 U.S. Elections

By Doug Crescenzi - 24 Jul 2025

Navigating the Political Horizon

Fund managers and institutional investors are already positioning for the next electoral cycles. Our analysis of prediction market signals provides early insights into potential policy shifts and their market implications.

2026 Midterm Elections

Congressional Control Probabilities

House of Representatives:

  • Republicans winning control: 31%
  • Democrats retaining control: 69%

Senate:

  • Democrats winning control: 30%
  • Republicans retaining control: 70%

Strategic Implications

The relatively close odds suggest:

  • Policy gridlock potential remains high
  • Sector rotation opportunities around election timing
  • Volatility windows around key primary dates
  • Infrastructure spending vulnerable to political shifts

2028 Presidential Election

Republican Nominee Probabilities

  • J.D. Vance: 55%
  • Ron DeSantis: 18%
  • Vivek Ramaswamy: 12%
  • Other candidates: 15%

Democratic Nominee Probabilities

  • Gavin Newsom: 19%
  • Gretchen Whitmer: 16%
  • Josh Shapiro: 14%
  • Other candidates: 51%

General Election Outlook

  • Democratic victory: 52-55%
  • Republican victory: 46-48%

Sector Investment Implications

Technology

  • Regulatory environment depends heavily on Democratic vs Republican control
  • Antitrust enforcement varies significantly by party
  • AI regulation timeline affected by election outcomes

Energy

  • Clean energy subsidies vulnerable to Republican sweep
  • Oil & gas policy shifts with congressional composition
  • Carbon pricing mechanisms depend on Democratic control

Healthcare

  • ACA modifications likely under unified Republican control
  • Drug pricing policies vary by party control
  • Medicare expansion requires Democratic majorities

Fund Manager Recommendations

Portfolio Hedging Strategies

  1. Sector Rotation Planning - Build election probability models into allocation decisions
  2. Policy Risk Assessment - Map portfolio exposure to potential policy changes
  3. Market Timing Considerations - Election volatility typically peaks 60-90 days before voting

Risk Factors

Key uncertainties affecting these probabilities:

  • Economic conditions in 2025-2026 significantly impact outcomes
  • Geopolitical events can reshape electoral dynamics
  • Candidate emergence could disrupt current frontrunner status
  • Third-party movements remain difficult to predict

Conclusion

While these predictions are admittedly early, prediction markets are already pricing in expectations that fund managers should consider. The relatively competitive odds across multiple scenarios suggest a continued period of political uncertainty with significant market implications.

Key Takeaway: Use election market probabilities as one input in portfolio construction, but maintain flexibility as these odds will evolve significantly over the next 18-36 months.

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