NEW YORK - Treasury Secretary nominee Janet Yellen’s unequivocal support for a pandemic rescue plan cuts both ways for investors, fueling optimism that the rally in risk assets will continue while bolstering concerns over a massive runup in government debt.
While the plan is expected to provide a critical boost for the coronavirus-hit economy, investors said the massive stimulus also could widen already huge deficits and drive up bond yields, while feeding a rally that some worry has already inflated bubbles in various assets. Other aspects of Biden’s plan, such as increased taxes on corporations and the wealthy, have also received a mixed reception.
Yellen alluded to some of the market’s longer term concerns in Tuesday’s testimony, during which she urged lawmakers to boost spending now, and pay down debt later. “As Treasury secretary, she does have a pretty progressive agenda that she is hoping to sell,” said Jack Ablin, chief investment officer at Cresset Capital Management.
After President Donald Trump frequently called for a weaker dollar to boost U.S. exports, Yellen on Tuesday addressed the Treasury’s stance on the greenback, saying the value of the dollar and other currencies should be determined by markets and that the United States should oppose attempts by other countries to artificially manipulate currency values to gain trade advantage.
Not even giving her a Day 1 off?
DUH
Few.
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