Portuguese Prime Minister Antonio Costa, who is halfway through a second four-year term, will face an early election on Sunday, Jan. 30 after parliament rejected his minority Socialist government’s 2022 budget.

The budget defeat came after the Socialist Party’s (PS) traditional allies on the left — the Communists (PCP), Greens (PEV) and the Left Bloc (BE) — declined to support it because the spending commitments were not ambitious enough. The defeat marked the first time Portuguese lawmakers had failed to pass a budget since 1974.

In a marathon series of televised debates with eight rival party leaders, Costa insisted that only the Socialists can bring stability and prevent a repeat of last autumn’s political crisis. “The country needs stability over the next four years so it can build on the opportunities for recovery and put the pandemic behind us,” Costa insisted in the final TV debate Monday. “The best solution is a Socialist Party majority... an absolute majority to guarantee four years of stability.”

Costa lays claim to overseeing Portugal’s strongest growth period since joining the eurozone in 2002, until the pandemic struck. Portugal’s economy shrank the most since at least 1960 in 2020 as the pandemic pummeled tourism, which represents about 15% of the country’s economy and 9% of employment. It’s now bouncing back, helped by European Union recovery funding that began to flow earlier in 2021 and the government’s decision to roll back austerity measures, maintain fiscal discipline and cut unemployment to pre-pandemic levels.

The center-right opposition, the Social Democrats (PSD), however, say growth has still been too weak and accuse Costa of redistributing rather than generating wealth, using consumer demand instead of productive investment to stimulate growth. This has kept wages and productivity chronically low, they say, pricing young people out of the housing market and fueling emigration.

An opinion poll released on Tuesday by Aximage even showed the opposition PSD with a huge jump in support to 34.4% from 28.5% a week ago. That means the PSD, led by moderate economist Rui Rio, is narrowly ahead of the Costa’s Socialists, who garnered 33.8% of voting intentions — down from 38.5%. The Left Bloc and the Communists polled at 6.6% and 4.5% respectively in the Aximage survey. The far-right party Chega (which translates as “Enough” in English), on 8% support, would become the third-largest force in parliament and is seen as a wild card in deciding the next government.

Both parties — the PS and PSD — polled well shy of a working majority, which means they will have to negotiate post-election alliances. The combined left still has a small lead, the poll showed. “It will be a close fight until election day,” said Adelino Maltez, professor of political science at the University of Lisbon, attributing Costa’s drop to his repeated attacks on the PSD, which largely avoided trading barbs. “This alienated… the average voter who is pragmatic and not committed to political struggles,” Maltez said, adding that Costa could still come out on top.

Market Pulse: With the Socialists holding 108 seats currently in the Assembly of the Republic and needing 116 seats to gain a majority, the crowd suspects that just such an outcome is not likely on Sunday. What is more likely at the moment is that the Socialists will lose seats — with contracts for “98 to 101” and “102 to 105” seats the top two contracts at 22¢ and 21¢, respectively. The crowd is also not ruling out contracts for “94 to 97” or “106 to 109” seat totals with both priced at 18¢.

Rep. Henry Cuellar (D-TX) vowed Tuesday to stay in his re-election race after his home was the subject of an FBI raid last week. In a video statement filmed in front of his childhood home, Cuellar said:

Cuellar’s remarks on Tuesday mark the first time he has addressed the raid in person. The congressman’s office released a statement on Wednesday after the raid, saying he would fully cooperate. The raid is a part of a federal investigation into US businessmen and Azerbaijan, according to CBS News. Cuellar has served as co-chair of the House Azerbaijan Caucus.

The developments come just over a month before Cuellar faces progressive primary challenger Jessica Cisneros in the Democratic primary for Texas’ 28th Congressional District. Cuellar defeated Cisneros by just over three points in 2020. Tannya Benavides is also running in the district’s Democratic primary.

Cisneros released a statement shortly after the raid last week:

On Monday, Cisneros scored the endorsement of the San Antonio Express-News, which endorsed Cuellar over Cisneros in 2020. Cisneros was also endorsed Monday by the progressive group Our Revolution as a part of the group’s first round of 2022 picks.

Market Pulse: While Cuellar still has high name recognition and a robust donor base, the crowd continues to favor Cisneros over the incumbent — 63¢ to 37¢ — since the market flipped last week on news of the raid. That said, turnout tends to be lower in midterm election years, which could benefit Cuellar and the crowd could be factoring that in with its pricing since the raid. The incumbent’s contract has risen 7¢ since dropping from 65¢ to 30¢. Cisernos’ contract, meanwhile, has gone the wrong direction since topping out at 72¢ — losing 9¢.

House Speaker Nancy Pelosi announced Tuesday she is running for re-election to her San Francisco-area congressional seat, although she has previously indicated this would be her last term as the chamber’s top Democrat after leading House Democrats for the last 19 years. In a video released by her campaign, Pelosi ticked off a list of unfinished business like “justice for immigrants” and issues related to education, housing and other goals.

Her announcement would appear to delay what had widely been anticipated to be the close of a trailblazing career for the first and only woman to serve as House speaker and the opening of a new era of congressional Democrat politics. To win backing for the speakership in 2018, Pelosi made a deal with party lawmakers that she would serve as speaker for just two more terms.

Pelosi’s silence on whether she will also seek to remain in Democratic leadership leaves the party to decide whether to reshape its hierarchy — particularly if it loses the House majority this fall.

Headed into the midterms, House Democrats hold the narrowest majority in decades, with 222 Democrats to 212 Republicans. GOP lawmakers have high hopes that they can win the majority this fall, especially with historical trends on their side — as the party in control of the White House often loses seats in the midterms after a new president takes office. Their hopes are also bolstered by President Biden’s approval numbers and continued concerns about the COVID-19 pandemic and inflation.

Pelosi, who is 81 years old, is also a superstar fundraiser. She had been signaling for months that her time in Congress was soon ending and that she was intending to keep a deal with younger party members that this term as speaker would be her last. Drew Hammill, a Pelosi spokesman, asked whether, if re-elected, she would seek the speakership or leadership of the Democratic Caucus, said:

Several House Democrats are eyeing that role, some reflecting a new generation of leadership ready to take over. Some like, House Democratic Caucus Chairman Hakeem Jeffries (D-NY), who is viewed internally as the favorite to succeed Pelosi as the leader of House Democrats.

Market Pulse: Speaker Pelosi’s contract rose 3¢ on Tuesday in the next speaker market as she announced her plans to continue serving in the House of Representatives. That jump means her contract closed at 8¢ — 2¢ higher than the top Democrat in the market — Hakeem Jeffries — and suggests that in the outside chance Democrats keep control of the House — a “yes” outcome trades at just 14¢ — the crowd is now favoring the Pelosi to keep her grip on the Democrat leadership position. House Minority Leader Kevin McCarthy (R-CA) leads the market at 73¢ — a full 65¢ ahead of the second-placed Rep. Steve Scalise (R-LA).

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Featured section news and analysis sources include: Reuters, Politico.eu, Euronews, The Hill (1 and 2), Financial Times, Bloomberg (1 and 2) and The Wall Street Journal.