Last Saturday, the US House of Representatives or the DPR in the United States finally approved a proposal for a US $ 1.9 trillion economic stimulus package.
This stimulus aims to overcome the negative effects of the COVID-19 pandemic which has killed more than 500,000 Americans and left millions of people out of work.
Furthermore, the proposal will continue to be discussed at the Senate level, which will test whether the proposed additional budget can deal with economic problems effectively. With the support of the Democrats in the Senate, it is estimated that this proposal can be approved by a majority vote. The US Vice President, Kamala Harris, as chairman of the Senate, although not having the right to vote, but has the power to make decisions if there is a balanced decision (50:50) in the Senate. Thus, market players hope that approval will be reached immediately before the end of the employee assistance program on March 14.
The implementation of this stimulus budget will include the following:
Some investors seem to anticipate stimulus and the impact of economic recoveries, such as expectations of rising inflation for bond instruments. The yield on US government bonds or US Treasury 10Y had reached 1.6% in trading last weekend. This level is the highest yield rate in the last year.
However, the plan to provide stimulus is expected to accelerate the recovery of the US economy, thereby increasing investors' risk appetite for risky assets, such as stocks for the medium to long term.