House Democrats on Friday unveiled a gargantuan $1.9 trillion coronavirus relief package, the first step of codifying the proposal crafted by President Biden’s administration.
Yellen is in the backstop and wants a really big plan. She is sitting on $1.5tn of liquidities…
Now the Treasury Markets are quite uncomfortable with the timing of this plan. The US economy is strengthening and Biden’s administration is quite nervous after the improvement in death and hospitalization figures, that questioning the size and even the timing of this plan and could force Biden’s administration to reopen the economy.
I pointed out many times the main risk for markets will be in March. The IRS will suck a huge part of the savings and another part of this manna is just mortgages, rents, and pre-covid cost of livings (transports, resto, …) postponed. If Biden succeeds to transform Robinhooders into Consumers, the flows in equities will dry up in March (adding the IRS effect) and the Move index could skyrocket.
Inflation is already there and could become really visible, as expressed in my last Global Macro Insight *: Things are MOVING… Too Much a Good Thing?
