Post-election stimulus a key upside risk

The rise in longer-term Treasury yields this week appears to reflect growing expectations of a Democrat clean sweep in November that could result in a larger fiscal stimulus down the road. Stock markets are benefiting from the speculation, even though any package could include a hike in corporate tax rates. While we agree that Democrats would try to push for a larger fiscal package, we are sceptical any deal could be done quickly, and it would be partly offset by tax increases.