Election News
We don’t have any relevant economic data being released today. This morning’s markets are trading almost exclusively on last night’s election results. The primary theory behind the stock rally is that President Trump’s policies, with Republican control of both chambers of Congress to support him, will create a better environment for equities through lower corporate tax rates and stronger economic growth. Bonds are tanking because those same policies are expected to significantly add to the U.S. budget deficit, which requires much more debt to be issued to keep the government running. This large amount of new supply likely will not be covered by ample demand to prevent yields from going higher, making current bonds less appealing to investors. Hence, bond selling and higher mortgage rates today.