US Senate's McConnell dials back opposition to stimulus, Treasury yields edge higher

(Sharecast News) - The leader of the Republican majority in the US Senate dialed back on his opposition to a fourth government stimulus package.
In a press conference held overnight, Mitch McConnell, a senator for Kentucky, said that if a spending bill were approved by the House of Democrats - which was controlled by the Democrats - and supported by the US President, then it would be put to floor "at some point".

McConnell reportedly also chose not to speak out again against the $1.8-2.2trn price tag for the bill that Democrats and the White House were arguing over.

The US dollar spot index dipped on the news and was 0.3% lower to 92.79 as of 1135 BST, just off its 52-week lows.

Yields on the benchmark 10-year US Treasuries were higher in response, adding two basis points to 0.81%.

Linked to the above, also overnight Stephen Roach, a highly-respected economist and senior fellow at Yale University, told CNBC that the Greenback was likely headed lower and yields higher.

"There's no free lunch, we're gonna have to provide foreign investors - who lend us money to fund our deficits - with some incentive for doing so," Roach told the broadcaster.

Nonetheless, obstacles remained, as Oanda's Jeffrey Halley and not just on the economic side of things.

An increasingly tight race for control of the Senate in the upcoming elections meant that Republicans in the chamber would increasingly be worrying about their own jobs as well, which could lead them to distance themselves from the President, Halley said.

Hence, in his opinion, Thursday's electoral debate between Trump and Joe Biden could see the President lose his ability to strongarm senators.

Analysts at Rabobank were in a similar frame of mind, telling clients: "we feel it makes little sense for the Democrats to agree a deal ahead of the election.

"Not only would this serve to boost Republicans seeking re-election, this would also likely offer President Trump a helping hand with millions of Americans out of work as a direct consequence of the pandemic.

"Presumably, if the election sees a blue sweep of the House, Senate and Whitehouse, then it is perhaps more likely that the package will be put on hold until January when the Democrats take control."