The rise in longer-term Treasury yields this week
appears to reflect growing expectations of a Democrat
clean sweep in November that could result in a larger
fiscal stimulus down the road. Stock markets are
benefiting from the speculation, even though any
package could include a hike in corporate tax rates.
While we agree that Democrats would try to push for
a larger fiscal package, we are sceptical any deal
could be done quickly, and it would be partly offset
by tax increases.
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