A new Washington policy memo from Raymond James, authored by Managing Director Ed Mills, finds the political environment entering the 2026 midterm cycle stacked against the current Republican congressional majority. Mills emphasizes that "affordability concerns are upstream of many of the policy issues weighing on U.S. voters’ minds" as the election approaches, and argues that both domestic and external policy disruptions are reinforcing voter dissatisfaction.
The analysis links recent policy actions - including tariffs and developments linked to the ongoing war in Iran - to persistent price pressure felt by households, and says these forces are contributing to a decline in the president's public standing. At the time of the report, President Trump’s approval rating sat at 38%. Mills underscores that "approval ratings this low nearly always translate into losses in at least one chamber of Congress" during midterm cycles, and cites data back to 1982 showing that presidential approval ratings seldom improve meaningfully between the five-month pre-election mark and Election Day.
Those measurements translate into a broadly unfavorable national environment for the majority party. On the generic congressional ballot, the analysis reports the opposition enjoying a +7.6% advantage. Mills notes that while mid-decade redistricting efforts in some states could reduce the total net-seat swing available to the opposition, the firm still assigns an 85% aggregate probability that the opposition will reclaim leadership of the House of Representatives.
By contrast, the Senate outlook is characterized as structurally more defensible for the incumbent majority. Mills argues that midterm Senate outcomes tend to track closely with the prior presidential returns in each state, and observes that seven of the nine core battleground states went for the Republican in the 2024 presidential contest. Given that geometry, the opposition would face a steep mathematical challenge to flip the upper chamber.
To help investors and observers frame potential policy trajectories, Raymond James outlines three baseline post-election configurations for Washington. The most likely path, with a 50% probability, is a divided government featuring a Democratic-controlled House and a Republican-controlled Senate. Mills warns that "divided government with a Democratic House may not look like past divided governments," and cautions that such a split could elevate the risk of budget standoffs even as the Republican Senate continues to advance judicial confirmations.
A full Democratic sweep of both chambers is assigned a 35% probability in the analysis. Under that scenario, the report projects the administration's tax initiatives would be largely shelved as legislative attention shifts toward corporate oversight. By contrast, a full Republican hold of both chambers carries a 15% probability and is associated in the memo with accelerated budget reconciliation efforts, expanded domestic energy initiatives, and a sharper posture on trade enforcement.
Mills' framework draws a direct line from the measured polling and approval metrics to likely legislative outcomes and the corresponding regulatory consequences for capital markets. The report frames the midterm vote as a referendum shaped by affordability and geopolitical risks, and presents quantified probabilities for the main Washington post-election configurations without projecting changes beyond those assessed scenarios.
Summary
Raymond James' Washington analysis by Ed Mills identifies affordability pressures, tariffs, and the ongoing war in Iran as significant influences on voter sentiment. With President Trump’s approval at 38% and an opposition advantage of +7.6% on the generic ballot, the firm rates an 85% chance the opposition retakes the House and sees a 50% likelihood of a Democratic House paired with a Republican Senate. A full Democratic sweep is placed at 35% and a full Republican hold at 15%.