Economic Stimulus News
What seems to be hurting bonds the most during early trading is optimism in the markets that another stimulus package may be coming sooner than later. There were already rumors of some common ground between Republicans and Democrats in Washington, indicating they are inching towards an agreement. Then came this morning’s Employment report that showed employment growth is still slowing. This report will likely be used to force Congress into a compromise to support businesses and the economy as the rebound is clearly running out of steam. That is a topic we addressed previously when talk of another stimulus package made headlines. It will be the bond market that will be used to fund a good part of the package if not most of it, meaning the government will need to sell even more bonds in the near future. The additional supply will make current securities less appealing to investors, driving yields and mortgage rates higher.