On Tuesday 12 January, President-elect Joe Biden chose the Fed ex-President Mrs Janet Yellen as candidate for Treasury Secretary. The Senate Finance Committee will be holding a confirmation hearing for Treasury Secretary-nominee Janet Yellen on Jan. 19. The hearing could be quite interesting as it will be done at the time in which the panel will still be controlled by the Republican Party. Democrats will not take control of the Senate until January 20, after Joe Biden and Kamala Harris are avowed.
The former chair of the Federal Reserve is anticipated to get an easy confirmation as Treasury secretary, something that will name her as the first female Secretary of the Treasury in US history and also the first person to hold the top 3 economic positions, i.e. Chairman of the President’s Economic Advisory Council, Chairman of the Federal Reserve and Head of the Treasury Department. Biden’s choice for the incoming US Treasury secretary wasn’t incidental as her experience and her nearly infallible past suggest that her confirmation is nearly certain. Yellen’s nomination will help Biden to win Congress’s endorsement of another COVID-19 aid package.
Meanwhile, Senate Majority Leader Chuck Schumer is on the agenda sent to his counterparts on Tuesday, saying the next US Senate, with a majority of Democrats, is committed to passing legislation that will increase the direct payments in the last stimulus bill to $2,000 along with additional Covid-19 relief measures including state and local aid and more money for vaccine distribution.
Based on a CNN report, Mrs Yellen faces one big risk on her nomination, and that will be the enormous speaking fees that she has received in the recent years from the financial industry, which could raise concerns that she is too cozy with Wall Street. She made more than $7 million in recent years after stepping down from the Fed by giving speeches to Wall Street banks, major corporations and industry groups. This is something that the majority of government officials do, however the disclosed fees are mainly from big banks, something that alerts the risk of conflict of interests. “In a recent letter to ethics officials, Yellen pledged to take steps to “avoid any actual or apparent conflicts of interest” if she’s confirmed to lead the Treasury Department. Specifically, Yellen promised that no later than 90 days after confirmation she will sell her stakes in several major companies, including Pfizer (PFE), Raytheon (RTN), DuPont (DD), ConocoPhillips (COP) and CNN parent AT&T (T).”
If confirmed as Treasury secretary, Yellen will have enormous sway over everything from taxes and climate to tariffs and government spending. Yellen will also chair a team of US regulators that responds to emerging risks in the financial system.
Nevertheless, Yellen’s nomination has been patronized by members of both parties, such as Senator Elizabeth Warren, Republican Senator Chuck Grassley and Senator John Thune.
In the the equity market meanwhile, the run up in rates since the start of the new year looks to have stalled for now. Strong demand for the 10-year auction was the catalyst. Also buyers stepped in after the long bond tested 1.92% and the 10-year climbed to 1.19%, the highest levels since mid-February on the bond and mid-March on the 10-year. Wall Street also pared early losses and finished with small gains as yields fell this week. The USA30 managed to close just over the 31,000 mark, with the USA500 at 3803, while the USA100 was just above the 13,000 level, all just shy of record highs.
The markets seem to be stabilizing and consolidating for now after a crazy first week of 2021 trading, pricing in virus, vaccines, lockdowns, stimulus, and possible Fed tapering.
Part of the USA100 dip is also due to the fact that the tech giants’ shares sank after President Donald Trump declared they were “doing a terrible thing” to the country after Twitter and Facebook and others silenced the president’s accounts on their social networking platforms.
The USA500 moved sideways, stuck within the 3,790-3,815 area since the Asia session; the USA100 rebounded from 20-DMA at 17,760 lows to 12,943, suggesting that the bullish bias has not been eliminated yet, while the USA30 remains in a consolidation mode in the 31,100 region. Facebook is down 2.34 % and Twitter fell 3% while the EURUSD lifted above Tuesday’s high to a peak at 1.2223, though remained shy of Monday’s high.
On the business front, Boeing reported the worst net aircraft sales ever recorded in 2020, as cancellations jumped to a record 650 high that same year.
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Andria Pichidi
Market Analyst
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