Hello, I'm R.J. Gallo, Senior Fixed Income Portfolio Manager at Federated Hermes.
How will a new administration impact fixed income?
The incoming Biden administration in combination, and this is important, in combination with full democratic control of the U.S. House and the U.S. Senate, are apt to lead to a greater fiscal expansion. In other words, more federal spending on many things. First and foremost, another stimulus relief package. I don't know if it's phase five or six, I sort of lost track. But we are talking about maybe up to 2 trillion dollars of more aid to an economy that is still struggling to more evenly recover from the COVID shock. Fiscal expansion will also likely take place in the form of more federal spending on healthcare and perhaps infrastructure. And parts of this will be paid through higher taxes but not all of it. So that means more borrowing. More fiscal expansion, more borrowing. We think interest rates are going to get a little bit more of a boost upward as a result.
Disclosure: Views are as of Jan. 14, 2021 and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector. Past performance is no guarantee of future results. Federated Investment Management Company 21-40018 (1/21)