The size of the stimulus deal is keeping the Treasury market on its toes, with short positions on the securities hitting a record level last week. The yield on the 10-year Treasury was holding around 1.6% this morning on continued bets that extra government spending could overheat the economy. Aside from fiscal matters, investors will also have to digest decisions from the world’s major central banks in the next 10 days.
Central banks helped save the world economy from depression as the pandemic struck. Now they are dealing with the hard part: managing the recovery amid a difference of opinion with investors.
Optimism that Covid-19 vaccines and continued government stimulus offer an escape from the worst health crisis in a century has sent bond yields soaring and pushed bets on rising inflation in the U.S. to the highest in a decade.