Traders Rush Out of Treasuries on Optimism About U.S. Stimulus
Comment of the Day

December 01 2020

Commentary by Eoin Treacy

Traders Rush Out of Treasuries on Optimism About U.S. Stimulus

This article from Bloomberg may be of interest to subscribers. Here is a section:

After efforts to prop up the virus-ravaged U.S. economy stalled for months, a group of Democratic and Republican lawmakers revealed a $908 billion stimulus proposal Tuesday. Getting it approved is far from assured. If it does pan out, that could prompt more money to move out of the safety of U.S. debt into stocks, accelerating a shift that began in November when the Dow Jones Industrial Average enjoyed its best month since 1987 amid promising Covid-19 vaccine news.

“Treasury yields are playing catch-up with the enthusiasm in the rest of the market, and it appears the impetus for additional fiscal spending is the catalyst for rising rates today,” said Charles Ripley, an Allianz Investment Management strategist who is based near Minneapolis.

Eoin Treacy's view

Investors appear to be rapidly reaching the conclusion that we are going to see simultaneous monetary and fiscal stimulus in 2021. That’s at odds with what is normally a feature of the 1st year of the US Presidential cycle. Historically, new governments have attempted to clear out the proverbial Augean stables in the first year of the term before electioneering begins for the mid-terms. 2017 was also an anomaly because of the Trump tax cuts and 2021 is unlikely to see any meaningful attempt at fiscal rectitude.

Click HERE to subscribe to Fuller Treacy Money Back to top