Delivering Global Macro Investment Insights

DeSaque Macro Research

DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the view to delivering global macro investment insights aimed at providing new ideas to clients.

Said DeSaque has over 26 years of experience working as a professional economist in financial services. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist at Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he eventually became Head of the London Economics Department.

Said takes a very keen interest in international relations, along with their implications for economic development. His research interests include the economic transformation of China and its implications for global capital markets, particularly in the United States. He is a member of Chatham House in London.

The US economy and capital markets have historically been Said’s main focus of attention. He frequently presents his views to institutional investors in diverse geographic locations. In recent years, Said has also been carefully monitoring economic developments in Asia, particularly China and Japan.

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Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Cross Asset Strategy

<p>President Biden has followed up fiscal stimulus measures passed into law in December with the announcement of an even larger programme just prior to his inauguration. Full passage of the new measures via regular legislative orders will require 60 votes in Senate, an unlikely outcome, but the alternative budget reconciliation process would require a simple majority in the Senate, although revisions to spending and revenue projections by various committees could become time-consuming.</p>
<p>Any fiscal stimulus invoked by the Biden Administration will be welcomed by the Fed who have appealed for extra help to support aggregate demand for the past few months. The Fed will not seek to prevent rising bond yields in 2021 unless short-term interest rate expectations become unhinged.</p>
<p>Financial markets and the Fed expect economic conditions to significantly improve as vaccine rollouts gain traction and, consequently, reduce the need to impose further lockdowns. Expectations of improving economic conditions underpin forecasts for a strong recovery in corporate profits to new all-time highs, thereby reducing the disconnect between the real economy and financial markets.</p>
<div>Banks' holdings of Treasuries and Agency securities have risen since May, while commercial &amp; industrial loans have fallen over the same period, historically consistent with the arrival of recessionary conditions. Holdings of government securities at banks since the Great Recession have been consistently higher than commercial &amp; industrial loans, thereby leaving them exposed to sizeable capital losses if bond yields continue to climb.  </div>

President Biden has followed up fiscal stimulus measures passed into law in December with the announcement of an even larger programme just prior to his inauguration. Full passage of the new measures via regular legislative orders will require 60 votes in Senate, an unlikely outcome, but the alternative budget reconciliation process would require a simple majority in the Senate, although revisions to spending and revenue projections by various committees could become time-consuming.
Any fiscal stimulus invoked by the Biden Administration will be welcomed by the Fed who have appealed for extra help to support aggregate demand for the past few months. The Fed will not seek to prevent rising bond yields in 2021 unless short-term interest rate expectations become unhinged.
Financial markets and the Fed expect economic conditions to significantly improve as vaccine rollouts gain traction and, consequently, reduce the need to impose further lockdowns. Expectations of improving economic conditions underpin forecasts for a strong recovery in corporate profits to new all-time highs, thereby reducing the disconnect between the real economy and financial markets.
Banks' holdings of Treasuries and Agency securities have risen since May, while commercial &amp; industrial loans have fallen over the same period, historically consistent with the arrival of recessionary conditions. Holdings of government securities at banks since the Great Recession have been consistently higher than commercial &amp; industrial loans, thereby leaving them exposed to sizeable capital losses if bond yields continue to climb.  

Biden's Fiscal Bazooka Raises Risks of Significant Bond Portfolio Losses for Commercial Banks