Yellen defends price tag of COVID stimulus, cites tools to fight inflation
- The stock market's record highs seems to have fizzled in recent days,
with the S&P 500 falling for a third straight day on Thursday. Fears of
inflation may be at work amid concerns that if all the stimulus being
pumped into the financial system works (i.e., people start spending,
shopping etc.) that could begin pushing up prices. That may be risky for
stock investors, as money flows back into the rising yield bond market.
In
fact, a sizable selloff has been seen in the U.S. government bond market
over the past six weeks, with yields on the 10-year Treasury note
climbing
from 1% in early January to 1.3% this week (yields move inversely to
price).
- "We think it's very important to have a big stimulus package [that]
addresses the pain this has caused - 15M Americans behind on their rent,
24M adults and 12M children who don't have enough to eat, small
businesses
failing," Treasury Secretary Janet Yellen told CNBC. "I think the price
of doing too little is much higher than the price of doing something big.
We think that the benefits will far outweigh the costs in the longer
run."
- Asked whether the surge of federal spending could prompt a sustained
rise in inflation, Yellen responded that it was a risk, but added that
inflation has been very low for many years and the Fed could always
mitigate that risk by raising rates. According to Speaker Nancy Pelosi,
the
House aims to pass its $1.9T coronavirus relief plan before the end of
February to beat a deadline on extending key unemployment programs. U.S.
stock index futures: Dow +0.1%; S&P 500 +0.2%; Nasdaq +0.3%.
- Yellen also said the White House will likely propose a second economic
recovery package later this year that would include spending on
longer-term
investments like infrastructure, renewable energy, education, job
training
and research and development. The proposal would also include tax
increases
on corporations and wealthy Americans that would "phase in slowly over
time." During his campaign, President Biden proposed raising the
corporate
rate to 28% from the current 21% (prior to President Trump's tax cuts in
2017, the U.S. corporate rate was 35%).
- How high Treasury yields can climb before ruining the risk-asset
rally? Analysts and investment managers discuss here.
|Today, 4:50 AM|4 Comments
- The stock market's record highs seems to have fizzled in recent days,
with the S&P 500 falling for a third straight day on Thursday. Fears of
inflation may be at work amid concerns that if all the stimulus being
pumped into the financial system works (i.e., people start spending,
shopping etc.) that could begin pushing up prices. That may be risky for
stock investors, as money flows back into the rising yield bond market.
In
fact, a sizable selloff has been seen in the U.S. government bond market
over the past six weeks, with yields on the 10-year Treasury note
climbing
from 1% in early January to 1.3% this week (yields move inversely to
price).
- "We think it's very important to have a big stimulus package [that]
addresses the pain this has caused - 15M Americans behind on their rent,
24M adults and 12M children who don't have enough to eat, small
businesses
failing," Treasury Secretary Janet Yellen told CNBC. "I think the price
of doing too little is much higher than the price of doing something big.
We think that the benefits will far outweigh the costs in the longer
run."
- Asked whether the surge of federal spending could prompt a sustained
rise in inflation, Yellen responded that it was a risk, but added that
inflation has been very low for many years and the Fed could always
mitigate that risk by raising rates. According to Speaker Nancy Pelosi,
the
House aims to pass its $1.9T coronavirus relief plan before the end of
February to beat a deadline on extending key unemployment programs. U.S.
stock index futures: Dow +0.1%; S&P 500 +0.2%; Nasdaq +0.3%.
- Yellen also said the White House will likely propose a second economic
recovery package later this year that would include spending on
longer-term
investments like infrastructure, renewable energy, education, job
training
and research and development. The proposal would also include tax
increases
on corporations and wealthy Americans that would "phase in slowly over
time." During his campaign, President Biden proposed raising the
corporate
rate to 28% from the current 21% (prior to President Trump's tax cuts in
2017, the U.S. corporate rate was 35%).
- How high Treasury yields can climb before ruining the risk-asset
rally? Analysts and investment managers discuss here.
|Today, 4:50 AM|4 Comments
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