Wall Street is bracing for the customary pre‑election dip as midterm elections scheduled for November 3 inject political jitters into markets, Citi analysts warn. Midterm years are historically the weakest in the four‑year presidential cycle: markets begin pricing in a risk premium roughly 50 trading days before the vote, and pessimism typically peaks on election eve.

Paradoxically, investors rarely care about the actual outcome — it is the uncertainty that drives the sell‑off. Once ballots are counted, equities tend to move into a steady recovery regardless of which party wins control. 

According to Citi strategists, a split Congress is often the market’s preferred result. Legislative deadlock prevents large spending packages and radical reforms, a dynamic that traditionally supports government bonds.

This time, however, the decades‑long playbook may falter. Citi cautions that any post‑election optimism could be tempered by the US fiscal backdrop. A massive budget deficit and looming, tough negotiations over the 2027 debt ceiling could constrain the scope for a typical rally in risk assets.