Transportation Secretary Buttigieg floats mileage tax to pay infrastructure bill


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Worst Treasury Quarter Since 2016 Ends With Many Questions

(Bloomberg) – As bond traders conclude the worst quarter for Treasuries since the aftermath of the surprise result of the 2016 US presidential election, there is no shortage of mysteries surrounding what will come next. – presenting infrastructure spending, this time – that could add up to as much as $ 3 trillion. Traders are just beginning to debate whether the tax increases that are expected to be included would offset the stimulating benefits to the economy and how that calculation could work in the world’s largest bond market. calm, rebounding modestly this week after a punitive stretch that pushed yields to pre-pandemic levels. In options, the cost of hedging against higher yields has been reduced, although the slope remains bearish. A force in the days ahead may sway that shift and help limit returns for now: the end-of-quarter rebalancing spurring buyouts by pension funds. But all eyes will be on the economic proposal that President Joe Biden says he will unveil next week. “The reason the market has yet to fixate on this second plan is because of the tax component,” said Michael Franzese, managing partner of MCAP LLC. “The bottom line, for me as a market maker and position taker, is that I don’t see the need to do anything. Tax increases are more detrimental than the positives we could get from infrastructure spending. ” For now, Franzese says he is relying on monthly and weekly employment data to determine how fast the current $ 1.9 trillion stimulus round is working and to see if he should resume selling Treasuries due seven years and out. The government will release payroll figures for March on April 2, the Good Friday holiday, when US stocks are closed and the bond market is open for half a day. Economists project that job gains are likely to skyrocket this month. Also next week, the end-of-quarter rebalancing may lead investors to bonds and equities, given the rally in equities and the sell-off of bonds. Strategists at Bank of America Corp., for example, estimate that $ 41 billion from private US pension funds will flow into Treasuries during the quarter, and most of that will still be done before the end. of March. global debt yields 1.68%, below the maximum of more than a year of 1.75% reached in mid-March. Trade reflation fueled by earlier rounds of stimulus and the Federal Reserve’s ultra-lax policy sent Treasuries down 3.79% this year through March 25. It would be the biggest quarterly loss since Donald Trump’s election victory in 2016. The next round of stimulus is the number of tax increases in the plan. For Craig Pernick of the Chevy Chase Trust, the uplifting potential of the spending figures being discussed in Washington may overshadow concerns about the headwinds of tax increases. it will be some infrastructure package, but it is not yet fully understood what it would be like, “said Pernick, the company’s director of fixed income. “Depending on how it is paid, it can be either way. I would be more concerned if it pushes moderately higher rates, adding fuel to the fire of economic growth. ” What to watch for Economic Calendar: March 29: Dallas Fed Manufacturing Activity March 30: FHFA House Price Data; S&P CoreLogic Housing Data; Conference Board Consumer Confidence March 31: MBA Mortgage Applications; ADP employment; MNI Chicago PMI; pending home sales April 1: Challenger job cuts; applications for unemployment; Langer Consumer Comfort; Markit Manufacturing PMI; construction spending; ISM Manufacturing Apr 2: Non-Farm Payrolls Feed Schedule: Mar 29: Fed Governor Chris Waller Mar 30: Vice President of Oversight Randal Quarles; John Williams of the New York Fed April 1: Patrick Harker of the Philadelphia Fed April 2: Raphael Bostic of the Atlanta Fed Auction Calendar: March 29: 13 and 26 week invoices March 30: 42-day cash management April 1: 4, 8-week invoices For more articles like This, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted source of business news. © 2021 Bloomberg LP

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