United States: The prospect of a blue wave pushes 10-year rates above 1%

Posted on Jan 6, 2021 6:35 PMUpdated Jan 6, 2021, 6:57 PM

It is not a coincidence. For several weeks now, the yield on US 10-year government bonds has flirted with the symbolic threshold of 1% below which it has been evolving since the worst of the crisis in March. But he had never crossed it higher until this Wednesday, as Democrats move closer to a victory in the by-senatorial elections in Georgia. It jumped nearly 10 basis points (bps) to reach 1.05% in the session. A confirmation of this success could send the benchmark rate to 1.5%, according to several specialists.

If the two contending seats switch to Joe Biden’s camp, the new US president will have a majority in Congress. And therefore free rein to apply his program. “The” blue wave “, which was announced before the presidential election, will finally take place, considers Franck Dixmier, at Allianz Global Investors. This means that Joe Biden will be able to put in place a very ambitious recovery plan, which amounts to more than 2,000 billion dollars ”.

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