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Control of the Senate is at stake
While we are all trying to get back into the rhythm of things, just be reminded that there is a key risk event to look forward to this week that could potentially give investors some reason to be a little more shifty.
What is really at stake going into the runoffs tomorrow?
In my view, it’s largely about symbolism at this stage. Even if Democrats sweep both seats, I doubt it will change anything on the whole saga of increasing virus relief checks from $600 to $2,000 – despite McConnell being the key blocker now.
However, should that scenario take place, it secures a ‘blue wave’ outcome in the election by the finest of margins.
There might be concerns that Biden may look to push more drastic changes on corporate taxes but I doubt that would fly given such a slim “majority”. But near-term market sentiment may still react to that, so it is a considerable factor in trading this week.
In any case, either outcome doesn’t do much to change the dollar trajectory at this stage but perhaps a Democrats sweep could imply more negative sentiment for the greenback – and Treasuries – amid the prospect of more spending.