What if 2026 US midterms deliver divided government?
A split Congress entrenches fiscal gridlock through 2028, capping new stimulus and tax change; markets price policy paralysis with a modestly steeper curve.
44%
our model probability over 6–18 months
prediction markets — wisdom of the crowd
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◎ Empirically anchored 44%· 90% range 32–56%· 40 analogues · measured class banking_crisis 100% in 18 mo · 3% held back for the unknownhow we built this number — every step
Measured class rate — banking_crisis ≈4.5338/yr → 100% in 18 mo100%
Analyst prior · editorial share 50% of the class50%
Pooled · weight 87%45%
Crowd — no liquid market—
Reserve 3% · no extremizing (×1.0)45%
Published44%
The class rate is measured from our dated, sourced event library (decade-normalized Poisson — the full table is public at base_rates.json). The variant’s share within its class is the analyst’s editorial call, published so you can audit it. A wider range means thinner precedent. Full recipe: methodology · scored at Reality Check.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (gold) over time vs the crowd's (Polymarket, blue), from the past toward the 6–18 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. The gold path is an illustrative reconstruction anchored to today's estimate — real dated events, not a live re-estimate history.
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What it would mean
If this plays out, it is a mixed shock. A split Congress entrenches fiscal gridlock through 2028, capping new stimulus and tax change; markets price policy paralysis with a modestly steeper curve. The trigger decomposes into signed root‑shocks — Yield-curve slope ▲ · Financial conditions ▲ · Risk appetite ▲ — which propagate through our causal graph to the markets below.
If it happens — the markets it would move
Biggest moves first. Projected moves are cascade-model priors; hist A–B% = what comparable past events actually did (measured abnormal returns), and model prior · unmeasured marks markets with no analogue backing yet. Tap any market for its price history.
Market
Class
Projected move
Historical precedent — what analogous events actually did
Across 40 analogous events (overlap‑weighted), as abnormal returns — market beta stripped, so it's the event's own effect, not the market backdrop. Shown at 20 days (persistent) and 5 days (immediate); ↺ fades = the two horizons disagree. Confidence = consistency × sample × significance.
Nikkei 225 record single-day rebound 2024-08↗First Republic Bank seized and sold to JPMorgan 2023-05↗Regional-bank panic deepens after Signature seizure 2023-03↗Kaisa Group offshore default 2021-12↗HYG record outflows in 2014 high-yield rout 2014-10↗Mt. Gox collapse 2014-02↗Mt. Gox halts withdrawals 2014-02↗Cyprus deposit bail-in 2013-03↗Spain requests EUR100bn bank bailout 2012-06↗Bankia nationalised in Spain's banking crisis 2012-05↗Portugal requests EU-IMF bailout 2011-04↗EU/IMF EUR750bn rescue weekend 2010-05↗Greece first EU/IMF bailout 2010-05↗Greece requests EU/IMF bailout 2010-04↗Anglo Irish Bank nationalisation 2009-01↗Fannie Mae and Freddie Mac conservatorship 2008-09↗IndyMac Bank seized by the Office of Thrift Supervision 2008-07↗2008 global rice crisis: Thai benchmark tops $1,000/ton 2008-04↗Northern Rock bank run 2007-09↗American Home Mortgage bankruptcy 2007-08↗Bear Stearns freezes redemptions on subprime hedge funds 2007-06↗New Century Financial bankruptcy 2007-04↗Turkey lets the lira float 2001-02↗Mexico $50bn international rescue package 1995-01↗Soviet August coup attempt against Gorbachev 1991-08↗Hong Kong Stock Exchange four-day closure after Black Monday 1987-10↗Penn Square Bank failure 1982-07↗Cuban Missile Crisis 1962-10↗India RBI growth-pivot rate cut 2025-12↗Gold tops $4,000 and silver spikes past $50 in historic squeeze 2025-10↗Platinum hits an 11-year high on Chinese jewelry demand and deficit 2025-06↗Israel strikes Iran — Operation Rising Lion 2025-06↗Bitcoin tops $111,970 for a new all-time high 2025-05↗China retaliates to Liberation Day: 34% tariffs + rare-earth controls 2025-04↗Gold tops $3,000 for the first time amid tariff and rate-cut fears 2025-03↗Tesla shares crater on DOGE political backlash and Europe sales collapse 2025-03↗TSMC slumps as DeepSeek roils AI-chip demand assumptions 2025-02↗Micron's weak FQ2 guidance sparks a sharp December selloff 2024-12↗Nasdaq Composite first close above 20000 2024-12↗S&P 500 first close above 6000 2024-11↗