Breaking News
Ad-Free Version. Subscribe now to follow markets, faster and distraction-free. Upgrade now
0
Ad-Free Version. Subscribe now to follow markets, faster and distraction-free. More details

Yields Spike On Democratic Senate Control; Markets Shrug Off Capitol Breach

By Investing.com (Darrell Delamaide/Investing.com)BondsJan 07, 2021 13:55
ng.investing.com/analysis/yields-spike-on-democratic-senate-control-markets-shrug-off-capitol-breach-49166
Yields Spike On Democratic Senate Control; Markets Shrug Off Capitol Breach
By Investing.com (Darrell Delamaide/Investing.com)   |  Jan 07, 2021 13:55
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Government bond investors are sensitive to political developments but this week has provided a surfeit of political convulsion rarely before seen. Nonetheless, markets took it in stride.

The surprising Democratic sweep of Tuesday's Senate runoff races in Georgia led to a stampede out of US Treasuries as the yield on the 10-year benchmark spiked above 1% for the first time since March.

UST 10Y 300-Minute Chart
UST 10Y 300-Minute Chart

The rate pushed above 1.05% before retreating, on the news that supporters of President Donald Trump had breached}} the Capitol building and lawmakers—who were in the process of certifiying Joseph Biden's electoral college win—had to be evacuated.

But there was no panic. Trump urged his supporters to go home peacefully, President-elect Joe Biden appealed for calm, and Washington Mayor Muriel Bowser imposed a 6 p.m. curfew. Reinforcements from the National Guard, the Secret Service, the FBI, and Virginia state police rushed to the Capitol to control the situation. Congress resumed its session by 8 p.m.

After dipping below 1.03%, the 10-year yield recovered to about 1.04%, a gain of more than 8 basis points on the day. Analysts expect Treasury yields to remain in the 1-1.5% range, but not much higher. Inflation expectations may inch up, but not too much.

What’s next? The Capitol riot interrupted the certification of the presidential vote by Congress, but it ultimately occurred, regardless of objections from some Republican lawmakers. The United States may have its own peculiar system of government and an even more peculiar political culture, but it has survived much worse than this.

Though some of the media commentators were bordering on hysteria, it was clear that order would be restored and constitutional procedures for the transfer of power would be followed.

Investors kept their focus on the likelihood of further fiscal stimulus and more government borrowing as Democrats gained full control of the White House and the Congress. It is a fragile control, but the prospect of a robust economic recovery as COVID-19 vaccines are rolled out outweighed the political concerns.

The {{169|Dow Jones Industrial Average rose nearly 438 points, or 1.4%, to reach a new record high as equity investors expressed confidence in the US economy. However, the Capitol riot dampened some of the Dow gains as well.

A national embarrassment, as some of the political rhetoric would have it? No doubt, but so what? There’s been a lot of embarrassment lately, but it hasn’t impacted US Treasuries as the safest investment in the world.

Yields Spike On Democratic Senate Control; Markets Shrug Off Capitol Breach
 
Yields Spike On Democratic Senate Control; Markets Shrug Off Capitol Breach

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email