Democrat sweep gives markets a reason to rethink path of interest rates

Democrats swept the White House and both chambers of Congress, prompting markets to reassess the expected path of interest rates. Investors are weighing whether the incoming administration's fiscal agenda, slower U.S. growth and a possible resolution to the Iran conflict could curb further rate hikes, though none of those outcomes is assured. The shift in political control matters because it injects new uncertainty into monetary policy expectations just as investors had begun to anchor on a steadier rate outlook. Traders will watch forthcoming fiscal proposals and economic data for signals on how the new leadership's policies might alter the inflation and growth trajectory the Federal Reserve is responding to.