Investors are betting more heavily that Democrats and Republicans will reach an agreement on a new round offor American households, as the coronavirus pandemic, which has killed over 200,000 and rendered 13 million people unemployed in the United States alone, continues to impact the economy.
Democrat House Speaker Nancy Pelosi and US Treasury Secretary Steve Mnuchin have held several conversations over the last few days and, while a definitive deal is still not in the bag, the two have agreed that additional aid will include lifelines for the airline industry and direct payments to households.
US Treasuries steadied after Monday's sell-off that lifted yields by almost a basis point, the largest one-day rise since March. The return of risk appetite was reflected most clearly in longer-dated Treasury bonds, with the 30-year yield rising to its highest since June. The 10-year Treasury was last at 0.767%, steady on the day, while 30-year bonds were yielding 1.56%, down 3 basis points, but narrowly below Monday's highs.
"Growing expectations for US fiscal stimulus have been rising in parallel with the president's hospitalization, judging by the bear steepening in the US Treasury curve," AxiTrader chief markets strategist Stephen Innes said, referring to the widening gap between 10- and 30-year yields, which reflects a growing expectation among investors that shorter-term borrowing rates will be kept low through more stimulus.
It wasn't because of DonTheCon. It would have happened under any President. The short-term part is because of him.
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