Home 2021 Mr. Biden’s Aid/Relief/Stimulus’ and the Global Financial Markets

Mr. Biden’s Aid/Relief/Stimulus’ and the Global Financial Markets

by Paul Ebeling

#aid/relief/stimulus #Biden #financial #markets

$CU $CAT $DE $OIL

Investors have been ‘jolted‘ into overhauling their portfolios in anticipation of the promised Biden aid/relief/stimulus $1.9-T plan.

Prices of commodities used in infrastructure projects, like copper, and shares in machinery manufacturers such as John Deere (NYSE:DE) and Caterpillar (NYSE:CAT) have advanced.

Global crude oil (OIL) prices tapped $55bbl for the 1st time since The China Virus hammered markets. And lower-rated US state and local debt has rallied on the promise of more federal support.

The most important impact may actually be in the government bond markets that form the basis for other asset prices around the world.

Shayne and I now expect lots of extra debt issuance, plus higher inflation, putting pressure on the Fed to wind down its bond buying program and potentially increase interest rates earlier and higher than expected.

The benchmark 10-yr and 30-yr government bond prices have dropped YTD, pushing yields to around their highest marks in about 10 months.

Lots of assets have been built on the prospects of ultra low interest rates for in the future In terms of financial risks, we think those bond prices to be the Big 1’s.

The Biden promise of more spending on the heels of a $900-B spending bill passed by Congress in December has set the stage for a rise in inflation and higher commodities prices and a lower USD.

Demand for hedges against rising prices has been very strong in here, with US funds that buy Treasury inflation-linked securities, or Tips, attracting almost $1.5-B of net inflows in the wk ended last Wednesday, marking the 15th wk running where more money entered those funds than left them.

The Big Q now is: How how much fuel the Democrats will add to the US economy, at a time where monetary policy remains extra ultra-loose.

The Big A: Looks like a lot.

Right now, the global economies lead by the US and China, are seeing and early cycle dynamics characterized by rising growth, rising corporate earnings, rising prices, aka inflation. That will continue as long as the central bank stimulus keeps coming.

Have a healthy day, Keep the Faith!

You may also like

logo-white

Your Trusted Source for Capital Markets & Related News

© 2024 LiveTradingNews.com – For The Traders, By The Traders – All Right Reserved.

The information contained on this website shall not be construed as (i) an offer to purchase or sell, or the solicitation of an offer to purchase or sell, any securities or services, (ii) investment, legal, business or tax advice or an offer to provide such advice, or (iii) a basis for making any investment decision. An offering may only be made upon a qualified investor’s receipt not via this website of formal materials from the Knightsbridge an offering memorandum and subscription documentation (“offering materials”). In the case of any inconsistency between the information on this website and any such offering materials, the offering materials shall control. Securities shall not be offered or sold in any jurisdiction in which such offer or sale would be unlawful unless the requirements of the applicable laws of such jurisdiction have been satisfied. Any decision to invest in securities must be based solely upon the information set forth in the applicable offering materials, which should be read carefully by qualified investors prior to investing. An investment with Knightsbridge is not suitable or desirable for all investors; investors may lose all or a portion of the capital invested. Investors may be required to bear the financial risks of an investment for an indefinite period of time. Qualified investors are urged to consult with their own legal, financial and tax advisors before making any investment. Knightsbridge is a private investment firm that offers investment services to Qualified Investors, Members and Institutions ONLY. Qualified Investors are defined as individuals who have met those Qualifications in the relevant jurisdictions. Members are defined as individuals who have been accepted into the Knightsbridge membership program. Institutions are defined as entities such as banks, pension funds, and hedge funds. If you are not a Qualified Investor, Member or Institution, you are not eligible to invest with Knightsbridge. All investments involve risk, and there is no guarantee of profit. You may lose some or all of your investment. Past performance is not indicative of future results. Knightsbridge is not a registered investment advisor, and this disclaimer should not be construed as investment advice. Please consult with a qualified financial advisor before making any investment decisions. By accessing this website, you agree to the terms of this disclaimer. Thank you for your interest in Knightsbridge.
CLOSE