ECON Yields Surge As Stunned Traders Learn Biden To Propose Massive $2 Trillion Stimulus

mbabulldog

Veteran Member
IMHO, this will set up the greatest opportunity for gold and silver in many years....YMMV, yada,yada,yada...



Last week, Goldman sparked a buying frenzy in the market (and selling in treasuries) when the bank said it expects the Biden admin would unveil a "modest" $750 billion fiscal stimulus plan, including some $300 billion in "stimmy" checks to Americans.



However, as bank after bank tried to upstage Goldman and threw around stimulus estimates as high as $1 trillion or even more, the market barely noticed when late this afternoon, incoming Senate majority leader, Chuck Schumer reportedly "pressed" (in Bloomberg's words) Joe Biden to propose more than $1.3 trillion in spending for his initial round of Covid-19 relief.

According to Bloomberg, "the two have discussed Biden’s plans ahead of the president-elect’s announcement on his economic-rebuilding proposals... Biden is set to speak at 7:15 p.m. Thursday to outline “his vaccination and economic rescue legislative package,” his transition team said in a statement."

But if markets ignored the Schumer report, they sure as hell noticed the CNN report which hit just after 9pmET, which prompted traders to take a double take because apparently Schumer "pressed" Biden so hard to expand the next stimulus round, he literally squashed the president-elect, who is now "expected to unveil a major Covid-19 relief package on Thursday and his advisers have recently told allies in Congress to expect a price tag in the ballpark of $2 trillion," CNN reported citing two people briefed on the deliberations.

The Biden team is taking a "shoot for the moon" approach with the package, one lawmaker in close contact with them told CNN, though they added that the price tag could still change.
The proposal, which is just shy of the Democrats' demand late last year when they sought a $2.2 trillion stimulus, only to agree on a $900 billion enacted last December, "will include sizable direct payments to American families, significant state and local funding - including for coronavirus vaccine distribution and other emergency spending measures - to help those struggling during the pandemic."



It wasn't immediately clear just how big the "stimmy" checks would be, but it is safe to say they will be at least $2,000 and perhaps much more.... which while great news for stocks as much of this money will quickly find its way into Robinhood accounts, is very bad news for bond yields as $2 trillion is a number which just might spark the runaway inflation the Fed has been dreaming of all these years.


Brian Deese, Biden's pick to lead the National Economic Council, said Wednesday at a conference that the package will include $2,000 stimulus checks, and address other relief measures like unemployment insurance.

And sure enough, even after Clarida, Brainard and countless other Fed speakers jawboned mightily all day to talk back expectations of an early taper today, sending yields sharply lower, the 10Y soared almost 5bps in minutes, from 1.07% to 1.12% amid fears that $2 trillion just may be a "big enough" number. What is curious is how slow Treasurys were to react to the news: it took them about 3-4 minutes to realize the gravity of what Biden was planning.



Brian Deese, Biden's pick to lead the National Economic Council, said Wednesday at a conference that the package will include $2,000 stimulus checks, and address other relief measures like unemployment insurance.

The yield spike predictably unleashed a jump in the dollar...



... which coupled with the rise in real rates, hammered gold (which makes zero sense since the US deficit is about to explode, but that's just how mechanistic algos roll)...



... and while S&P and Nasdaq futures dipped, small caps - i.e., value names which are boosted by the reflation them - exploded higher.



Biden is set to announce the details of his plan in Wilmington, Delaware, Thursday evening, and there is a chance the number may increase still.
 

Kathy in FL

TB Fanatic
Please realize that a proposal is not a done deal. And that it will also depend on what is stimulated. For isntance, would the market react as favorably if most of that money was actually just going in to prop up failing states and state governments? And that the money wouldn't actually trickle down to the people?

Biden is not known for actually being able to get things done and his support staff are at least as bad.
 

20Gauge

Has No Life - Lives on TB
My thoughts also. The fact it was only 2 trillion would amaze me. Perhaps 2 trillion per quarter would make more sense.
 

Troke

TB Fanatic
Please realize that a proposal is not a done deal. And that it will also depend on what is stimulated. For isntance, would the market react as favorably if most of that money was actually just going in to prop up failing states and state governments? And that the money wouldn't actually trickle down to the people?

Biden is not known for actually being able to get things done and his support staff are at least as bad.
The Big Bucks are going to those State gov's whose retirement plans have been looted by the unions. For example, the Cal. Retirement Plan has several people at over $180,000/yr and lots over $100,000/ yr. and oddly enough, it is going broke because rates were never raised high enough to pay for that. Ditto Illinois and others.

We should all be so lucky to have the Fed bail us out while living high on the hog. (Metaphor there) .
 

TammyinWI

1st Amendment Right and Pertinent
Oh look! A lot of people will look at his pic and see a halo, and their "savior!"

Which he is not. I would much rather have a stimulus check then ML. Hands down.
 

The Hammer

Veteran Member
it'll be $4 trillion
That's the number I thought he was going to start with.

Biden is supposed to be speaking about this today. Watch the wailing and gnashing of teeth start immediately once different interest groups realize they won't get as much of the pie as they want.

Because, ya know, Biden OWES them!
 

raven

Has No Life - Lives on TB
That's the number I thought he was going to start with.

Biden is supposed to be speaking about this today. Watch the wailing and gnashing of teeth start immediately once different interest groups realize they won't get as much of the pie as they want.

Because, ya know, Biden OWES them!
my guess is the Democrat Corporation will not want to appear to be outdone by Trump.
they will bring at least what Trump brought, if not more. Especially, to those areas burned down by Antifa
 

Bps1691

Veteran Member
Please realize that a proposal is not a done deal. And that it will also depend on what is stimulated. For isntance, would the market react as favorably if most of that money was actually just going in to prop up failing states and state governments? And that the money wouldn't actually trickle down to the people?

Biden is not known for actually being able to get things done and his support staff are at least as bad.
Odds are what ever they push out will be going to their favored causes. The Illinois/California/Etc will get their pension bailed out, every connected business or organization will get their share and they'll have a slew of money going only to their favored minorities.

The real awakening will be when they get rid of the Trump tax cuts, screw with the taxes on capital gains and inheritance, and raise corporate tax rates through the roof. Course that will be at the same time they lock us down even tighter and kill off all but the favored big businesses at the expense of small businesses.
 

Walrus

Veteran Member
my guess is the Democrat Corporation will not want to appear to be outdone by Trump.
they will bring at least what Trump brought, if not more. Especially, to those areas burned down by Antifa
And of course it's all due to the Rona and Trump's mismanagement of same.
 

bw

Fringe Ranger
Think of the bread and circuses Rome could have put out if only they had electronic money. The empire might have lasted an additional decade or two.
 

Donghe Surfer

Contributing Member
well, if they're going to break the (U.S.) bank, so to speak, might as well build high-speed railways all over the U.S., just print money for it. Don't go half-assed, go full diarrhea.
:fl2:
 

Ravekid

Veteran Member
Every state that offers reasonable pension payouts should immediately plan on hiking those payouts and should also consider backdating the new payouts. The first thing these states should do is find out what percentage of retirees live in state. If a substantial number of retirees are still in state, then hiking their pensions would likely be good for the local economies where these folks live. Then, once these states have no more money, they can go and beg uncle Joe for their huge bailout. If uncle Joe doesn’t come up with the money, just stop doing any interstate work and tell the Feds the state is broke due to giving progressive valued pensions.
 

Double_A

TB Fanatic
Please realize that a proposal is not a done deal. And that it will also depend on what is stimulated. For isntance, would the market react as favorably if most of that money was actually just going in to prop up failing states and state governments? And that the money wouldn't actually trickle down to the people?

Biden is not known for actually being able to get things done and his support staff are at least as bad.
That's OK

We will start to see Obama's guiding hands soon.
 
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