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As the world continues to grapple with a pandemic, the US government is facing upheaval, and myriad global events have the potential to disrupt asset markets. Should we also be concerned about the implications of rising interest rates?
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<p>* The House plans to <a href="https://www.cnn.com/2021/01/12/politics/house-vote-25th-amendment-trump/index.html">vote today</a> on whether to remove Trump using the 25th amendment.<br/>* A formal <a href="https://www.wsj.com/articles/house-democrats-to-begin-efforts-seeking-to-remove-trump-from-office-11610375178">impeachment vote</a> is scheduled for Wednesday.<br/>* The Acting Homeland Security Secretary <a href="https://www.bloomberg.com/news/articles/2021-01-12/washington-tense-as-dhs-chief-quits-fbi-warns-of-armed-protests">resigned</a> as the FBI forewarns of armed protests.<br/>* Secretary of State Pompeo has <a href="https://www.nytimes.com/2021/01/11/us/politics/cuba-terrorism-trump-pompeo.html">designated Cuba as a state sponsor of terrorism</a>.<br/>* The Atlanta Fed President forecasts a <a href="https://www.cnbc.com/2021/01/11/feds-bostic-sees-possible-interest-rate-hike-as-soon-as-the-second-half-of-next-year.html?__source=sharebar|twitter&par=sharebar">potential interest rate hike</a> coming sooner than expected.<br/>* China's recovering economy is <a href="https://www.nytimes.com/2021/01/12/business/china-renminbi-yuan-strong.html">bolstering</a> its currency.<br/>* Europe is facing a looming <a href="https://www.bloomberg.com/news/articles/2021-01-12/euro-area-heads-for-double-dip-recession-as-lockdowns-drag-on?srnd=economics-vp">risk of a double-dip recession</a>.<br/>* Analysts state that Bitcoin's dramatic correction is healthy, considering <a href="https://cointelegraph.com/news/analysts-say-bitcoin-price-drop-to-30k-was-healthy-and-necessary">its recent fluctuations</a>.<br/>* Consumer inflation expectations for the upcoming year <a href="https://www.newyorkfed.org/newsevents/news/research/2021/20210111">remained steady</a> in December.<br/>* The yield on the 10-year Treasury bond continued to <a href="https://www.morningstar.com/news/dow-jones/2021011112126/financials-up-with-treasury-yields-financials-roundup">rise,</a> reaching 1.15%:</p>
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<p>Last week, shares in emerging markets outperformed other major asset classes, according to a set of exchange-traded funds, with data as of Friday's close (January 8). Equities in developed markets outside the US closely followed in performance.</p>
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<p>* The House is preparing for a <a href="https://www.wsj.com/articles/house-prepares-for-trump-impeachment-could-add-charges-on-georgia-allegations-11610295488">new impeachment vote</a> against Trump.<br/>* Authorities are bracing for <a href="https://www.cnn.com/2021/01/11/politics/law-enforcement-preparations-violence-capitol-riot/index.html">potential protests</a> and violence in Washington.<br/>* Wall Street strategists <a href="https://www.bloomberg.com/news/articles/2021-01-11/what-macro-strategists-are-saying-about-impact-of-u-s-stimulus?srnd=premium">expect</a> reflation momentum to increase.<br/>* Will 2021 witness record levels of <a href="https://www.wsj.com/articles/this-could-be-the-best-year-on-record-for-job-growth-11610274600">job growth</a> in the US?<br/>* The Philly Fed’s <a href="https://www.philadelphiafed.org/surveys-and-data/real-time-data-research/ads">ADS Index</a> approaches a signal indicating US economic contraction.<br/>* US payrolls <a href="https://www.cnbc.com/2021/01/08/jobs-report-december-2020.html">dipped</a> in December, marking the first monthly decrease in eight months.<br/>* The 10-year Treasury yield increased to 1.13%, the <a href="https://www.cnbc.com/2021/01/08/us-bonds-treasury-yields-climb-higher-ahead-of-december-jobs-data.html">highest since March:</a></p>
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In this edition:
- The stock market remains resilient despite the chaos at the Capitol
- A positive start to the year for strategic benchmarks
- Diverging trends for managed risk strategies
Is Insurrection Bullish? The recent week suggests that the stock market remains largely unaffected by disruptions such as the riots at the US Capitol and ongoing political instability in Washington.
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President Donald Trump is expected to leave the White House on January 20, possibly even sooner if attempts to remove him from office intensify in the upcoming days. Regardless of the unfolding events in the next two weeks, the economic and social dynamics that contributed to Trump’s election are unlikely to dissipate. In fact, it is quite possible that these factors may intensify and expand in the coming months and years. As a result, political and economic uncertainty may escalate in ways that are not yet fully realized.
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