Over the past several days we have suggested that control of the United States Senate would come down to the results in six states. Well ... today the six became seven as Republican prospects in Pennsylvania took a nose dive in the judgement of InTrade market participants. As a result we've added the Keystone State to both our "Tracking Key Senate Races" graph and "Competitive Senate Races" table. Today also saw a major rebound in Republican prospects in West Virginia as well gains in excess of 5% in Washington and California. Action was basically sideways in our model's evaluation of the data in Illinois, Colorado and Nevada.
In terms of Democrats prospects to hold the Senate, the emergence of Pennsylvania on our "Most Competitive" screen means that Democrats need only win 2 of 7 races in this category to hold operational control of the Senate. But ... if you are an InTrade market investor, remember that independents do not count in determining control under the "Democrats to Control Senate" contract. Senators Lieberman and Sanders do not count toward Democrats reaching to 50 they need for this contract to expire at 100. In other words, if Republicans end up holding 49 or more seats, this contract will expire at zero. InTrade has clarified that even though Senator Murkowski is running as a write-in candidate that is "officially running as a Republican. Should Murkowski win the seat it will be considered a Republican seat."
Despite the emergence of Pennsylvania, on balance Republican prospects improved on Wednesday. Our individual and cumulative outcome distribution graphs follow.
Republican control probabilities under both models both came in well under 20%.
Republican prospects for House control remain solid coming in at a midpoint estimate of 86%. Our projected seat estimate today is 235 at all three pricing points.
What to Expect
Continued volatility based not just on polling data, but on other news -- particularly economic data. Democrats should count their "lucky stars" that the next national Employment Situation report is not due out until the Friday after the election. Based on Gallup's polling, it is likely that the report from BLS will show an increase in the unemployment rate from the 9.6% reported earlier this month.
However, there are a few government reports on economic conditions coming out pre-election that could impact voters actions.
First, this Friday, BLS will release its State and Regional Employment and Unemployment report. News of state unemployment rates and payroll jobs data for individual states could have an impact in those states.
Second, the Labor Department will report unemployment insurance claims data on both this Thursday and next Thursday.
Third, with the focus on issues swirling within the real estate market, there will be interest in the release of both Case-Shiller and FHFA home price data on Tuesday, October 25th.
Fourth, two reports from the Bureau of Economic Analysis will be released before the election. On Friday, October 29 BEA will release its advance estimate of 3rd quarter Gross Domestic Product. Monday, Novemeber 1st, they will provide estimates of personal income and outlays for September.
Stay tuned and expect continued volatility.
