Midterm election risks have yet to ignite U.S. stock market volatility. JPMorgan: VIX may rise in the coming weeks.

The U.S. midterm elections are one of the most closely watched major events in global financial markets for the remainder of this year, but signals from the derivatives market show that traders are not currently betting the elections will bring sharp swings to U.S. stocks. Options market data shows that as the November elections approach, implied volatility for U.S. equities remains at relatively low levels, with the forward curve of the Chicago Board Options Exchange Volatility Index (VIX) notably below levels seen before previous U.S. midterm elections. The 2026 U.S. midterm elections will be held in November, when all 435 seats in the U.S. House of Representatives and about one-third of Senate seats will be up for re-election. JPMorgan derivatives strategists led by Bram Kaplan noted that because the market sees a high probability of political gridlock after the election, the midterms may have a relatively limited impact on the macroeconomic and policy outlook. That judgment is also reflected in S&P 500 index options pricing, with the market currently pricing in only a modest election-event risk premium. Specifically, the options market expects the S&P 500's implied move on November 4, after voting ends, to be slightly above 0.8%, roughly in line with the expected move for the Federal Reserve's interest rate decision a few days before the election. This means that although the midterm elections are drawing intense investor attention, current pricing suggests traders do not view them as a risk event capable of triggering major swings in U.S. stocks. Still, JPMorgan strategists noted that, based on historical patterns, U.S. equity volatility tends to climb gradually in the months before midterm elections, typically peaking about a month before voting day and falling back after the election ends. Recent research by JPMorgan Asset Management on historical data also shows that midterm election years are often accompanied by higher realized volatility, although in some years market turbulence was actually driven mainly by other factors such as monetary policy rather than the election itself. It is worth noting that the current VIX forward curve remains significantly below levels seen before previous midterm elections, while investors are simultaneously facing a range of other macro risks, including market disruption from artificial intelligence and inflation and economic risks triggered by higher oil prices amid the Iran war. Therefore, JPMorgan strategists believe that although the options market is currently reacting mildly to the midterm elections themselves, there is still room for volatility to rise in the coming weeks. The strategists advise investors to watch for the possibility of higher volatility before the election, because the VIX could repeat its historical pre-midterm upward pattern, while other key macro risks could also intensify further before the election.