NTM Advisory analyzes historical market trends ahead of US midterm elections

NTM Advisory has released an analysis examining the historical performance of various asset classes surrounding US midterm elections, specifically focusing on the cycles of 2010, 2014, 2018, and 2022.

Regarding gold, the report indicates that the metal has historically performed well in the periods following midterm elections when the US dollar weakens. For instance, gold rose by 18% in the 181 days following the 2022 election and 14% after the 2010 election. Conversely, in 2014, gold declined by approximately 2% due to a strong dollar.

In the equity markets, the S&P 500 has shown a strong historical tendency to rise in the 12 months following a midterm election, with a positive return probability of over 85% and average returns between 14% and 16%. While the S&P 500 saw gains after the 2010, 2014, and 2022 elections, the 2018 cycle was an exception where the index experienced a sharp sell-off before recovering.

The analysis also notes that while US bond yields have declined in three of the last four cycles, the Federal Reserve’s continued tight monetary policy remains a primary risk that could cause current market behavior to deviate from these historical patterns.