Yesterday, after the democrats took the House of Representatives, the dollar bill's value dropped .3%. Furthermore, the yield on the benchmark 10-year Treasury note fell to 3.221 percent.Mazen Issa, senior foreign exchange strategist at TD Securities in New York, said that because of the midterm elections, trading has become "Risk-on." Risk-on, Risk-off investing is when investors move from riskier but more high-yielding investments to less risky and low yielding investments, or vice-versa.
This year, Trump and congressional Republicans passed a significant tax cut, and due to strong economic growth, the U.S. Federal Reserve has been steadily raising interest rates. Due to the Democrats taking control of the House, further tax cuts are not likely to be passed.
https://www.ft.com/content/b5cdc7f0-e238-11e8-a6e5-792428919cee
Questions:
1. Will the increase in Risk-spenders help the US economy?
2. Do you see any other consequences of the midterm elections relating to fiscal policy?
1. It depends, since they are high risk options, they could either hurt or help the economy.
ReplyDelete2. the public probably does not care about these issues enough for them to effect the midterms.
1. No, because the stock market and the US economy of most people are not closely linked. No matter what stock brokers do, as long as another recession doesn’t happen, the average american won’t be greatly impacted.
ReplyDelete2. If the midterms favor Democrats (which they did), economic policy will shift from trickle down to welfare, meaning the low class will have more money to spend on goods and services, helping the economy overall.