Last week unprecedented scenes – though not entirely unexpected – unfolded in Washington DC, as disenfranchised pro-Trump supporters raped the U.S. Capitol.
The riot marked another flashpoint in what has been a turbulent four-year period in US politics, with more unrest expected in the final days of Donald Trump’s presidency.
An FBI bulletin warns that the Trumpists are planning “ armed protests ” in all 50 state capitals and Washington DC in the days leading up to Joe Biden’s January 20 inauguration.
Biden faces an uphill struggle – both in terms of unifying a divided population and repairing the economic damage caused by the Covid-19 pandemic.
The country’s debt topped $ 26 trillion (€ 21.9 trillion) in 2020, and the president-elect has pledged to provide an additional $ 2 trillion in stimulus to promote the adoption of electric vehicles, a better insulation of buildings and increased use of renewable energies in electricity production. sector.
Even before the result of the US election was officially confirmed, the credit markets had reacted well. Positive news on the Covid-19 vaccine front late last year also helped the post-election rally seen in many sectors, from commercial to real estate.
However, according to Howard Cunningham, fixed income portfolio manager at Newton Investment Management, “more rate sensitive sectors could struggle if government bond yields continue to rise.”
Inflation is a growing concern for global institutional investors, as is the ongoing liquidity problem.
Inflation expectations in the United States vary widely, and the planned fiscal stimulus should increase inflationary pressure.
The US Federal Reserve has allowed inflation to surpass its historic 2% target, while the new administration is expected to be more supportive of accommodative monetary policy.
According to fixed-income specialist Tabula Investment Management, Biden’s appointment of former Fed Chairman Janet Yellen as Treasury secretary suggests “a close link between fiscal and monetary authorities.”
The fund manager has warned that these factors, combined with the demand / supply fallout from Covid-19, mean inflation is back on the agenda.
From our 2020 Global Industry Report: Bidenomics: a sustainable status quo?
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