Comment: The US elections could further exacerbate a major risk for the markets

The direct consequences of the midterms for the stock markets will probably be limited. But a president paralyzed domestically could create new dangers. A comment.

The Capitol in Washington D.C.: The Democrats' victory could curb the desire to take on debt.

The Democrats' landslide victory in the US midterms will cause serious political upheaval in the largest global economic power. But the markets are unlikely to derail the election in the short term because President Donald Trump retains his veto power, which he can probably use to block any legislative proposal he doesn't like.

In the long term, however, the shift in power is likely to have an impact, and in a way that could well be positive for Wall Street and the rest of the financial world. However, a major risk will not disappear after the midterms and could even become more acute.

Let's start with the positive part: With the division of power between Congress and the President, the likelihood of massive new tax cuts or billion-dollar spending programs from the Trump administration decreases. Less new debt means the U.S. Treasury has to issue fewer new bonds, which supports prices and pushes down yields.