Over the weekend, the US House of Representatives approved the $1.9 trillion stimulus package championed by Biden, taking the bill one step closer to fruition. The package – which includes USD$1,400 direct payments to many Americans – must now go to the Senate, which is more-likely-than-not to give its approval. US lawmakers are aiming to have the bill on the President’s desk by March 14th, when a number of key benefits expire. Despite all the recent speculation around overheating and a potential uptick in inflation, the new administration remains focus on remaining pockets of weakness in the US economy, with the Treasury Secretary Janet Yellen saying “people need more help putting food on the table and keeping a roof over their head until the virus is under control.”
Global bond yields eased a shade on Friday but remained well up over the week. The ‘reflation’ trade was the theme of the week, driven by the strengthening global economic recovery, investor expectations of higher inflation, and the prospect that policy rate hikes may not be as distant as they once seemed. The yield on the US 10-year eased to around 1.4% on Friday after hitting 1.6% earlier in the week and remains up more than 50 basis points over the year. NZ bond yields also rose sharply over the week in the aftermath of the RBNZ meeting, with the 10-year nearing 2% at times on Friday and closing the week sitting at 1.89% - a lift of more than 30bps over the week.