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Researcher Seung-won Kang said: “In November, the FOMC maintained a principled position on further easing while freezing all existing policies.”
Researcher Kang said: “The rate on US 10-year Treasuries, which had soared to 0.94% on Presidential Election Day, plunged to 0.716% in the Asian market the day before as they rose. uncertainties related to the presidential election. ” “The (volatility) index has fallen.”
This was interpreted to reflect market expectations that the Fed will ease further as fiscal policy expectations weaken due to uncertainties related to the presidential elections.
However, he said, “when the Fed’s cautious stance on further easing was confirmed, the 10-year US Treasury rate ended up significantly higher.” “The Fed currently needs income support rather than a wide range of liquidity supplies. He noted that” targeted support is needed. ”
“In fact, the biggest problem facing the US economy right now is the depletion of federal unemployment benefits,” he said. President Powell told a news conference that he is not concerned about the role of direct financing for fiscal policy. He has suggested that the Fed will not be the main character. ”
In the end, it was introduced that this urged Congress to a policy of additional economic stimulus, and the day before, Republican Representative in the Senate of Republican McConnell mentioned that for the first time after the presidential elections, discussions on economic stimulus policies would begin. additional.
Researcher Kang said: “With stable short-term fund market indicators despite growing uncertainty related to the presidential elections, there is not enough justification for further easing intervention by the Fed,” he said. “It is determined that the government, not the central bank, continues to hold the key to stimulating the economy.”
In fact, according to the Treasury bond issuance plan announced this week, the fourth quarter bond issuance plan was lowered ($ 1.21 trillion → $ 617 billion) due to no agreed stimulus policies. additional economic in October.
However, he said: “The amount of bond issuance in the first quarter of next year is $ 1.127 trillion, suggesting the largest issuance plan since the second quarter when the Cares Law was passed (average of $ 296 billion in 2019) After that, the Fed may think about expanding QE. ”
“If large-scale government spending is a prerequisite for QE expansion, the downward rigidity of the US 10-year interest rate could be strengthened.” “At the moment, there is no real benefit from additional purchases of long-term US bonds, and expectations of expanding government spending stand out.” We maintain a modest increase in US bond yields through the end of the year. “
Reporter Chang Tae-min [email protected]
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