Markets are increasingly focused on the 2026 midterm elections, which are 10 weeks away and could remove full control of Congress from President Donald Trump and the Republican Party. Democrats are favored to win at least one chamber and lead the generic ballot by roughly 6 percentage points, according to FiftyPlusOne, a website that tracks poll results. Analysts told CNBC that divided government would likely block major non-bipartisan legislation and turn routine congressional business into prolonged negotiations. Ed Mills, managing director of Washington policy at Raymond James, said markets often prefer divided government because it limits extreme legislation, but cautioned that the biggest policy-driven market moves of the past two years have come through executive action. He expects President Donald Trump could respond to a Democratic House majority with more executive action rather than greater cooperation. Investors are also watching the $41.5 trillion debt ceiling, which most financial institutions expect the United States to reach in midyear 2027. A failure to raise it could prevent the government from borrowing to meet its obligations and risk a default. Analysts expect negotiations to go down to the wire, potentially increasing volatility and Treasury rates as the X-date (the point when the Treasury can no longer pay its obligations) approaches. A delayed or contested election result could create further uncertainty, pressure equities and potentially lower rates through a flight to quality into government debt.