As U.S. Bond Yields Rise, Are Inflation Worries Justified?

Israeli study points to vaccine success

A big driver in the surge in U.S. bond yields continues to be positive headlines surrounding COVID-19 vaccines, Ristuben noted. A recent Israeli study showed that mass vaccinations of individuals 70 and older led to a dramatic decline in the severity of COVID-19 infections among individuals in the same age range, he said. The study offers proof that what Pfizer and other drugmakers reported in their clinical vaccine trials is holding up in real life, Ristuben said.

“Markets and economists have been projecting strong growth in 2021 due to the ability of vaccines to help return everyday life to a more normal state—and the Israeli study indicates that such a return to normalcy probably isn’t just some fantasy,” he stated. Ristuben added that the expected approval of Johnson & Johnson’s one-shot COVID-19 vaccine by U.S. health regulators is additional good news in the fight to end the pandemic.

U.S. $1.9 trillion-stimulus package: Headed for a March approval?

Turning to the latest on U.S. fiscal stimulus, Ristuben noted that the House of Representatives is slated to approve President Joe Biden’s $1.9 billion relief package on Feb. 26. From there, the legislation will advance to the Senate, where the most contentious issue in the package—an increase in the federal minimum wage to $15 an hour—will be stripped out, following a ruling from the Senate parliamentarian, he said.

“The removal of the minimum-wage increase should help the bill move forward largely as is. Ultimately, I think the Democrats will be able to pass this through the Senate with at least 50 votes, perhaps with Vice President Kamala Harris casting the tie-breaking vote,” Ristuben remarked.

Recent polling suggests the relief package, dubbed the American Rescue Plan, has a 70% approval rating among U.S. residents, he added. Highlights of the bill include an increase in federal unemployment benefits from $300 to $400 a week, $1,400 stimulus checks for qualifying individuals, $350 billion in aid to state and local governments and additional funding for schools, Ristuben explained.

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These views are subject to change at any time based upon market or other conditions and are current as of the date at the top of the page.

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