Can the Biden $1.9 trillion turn Chair Powell into an optimist and a policy ”hawk”?: The MUFG Global Markets Podcast

We build in more fully President Biden’s $1.90 trillion Federal fiscal stimulus package. Result: our models forecasts for real GDP growth are now the highest of any of our competitors on Wall Street, with a base case forecast of +9.079% yoy for year 2021 and risk towards +10.25% yoy. Our forecast for the U3 unemployment rate of 3.92% for 2021 remains the lowest of any of our competitors. Our forecast for the unemployment rate at year-end 2022 is 3.11% – the lowest unemployment rate since year 1953.

With such forecasts, U.S. Rates Strategist John Herrmann expects the FOMC to mark their GDP growth figures up towards +8.25% and to cut their unemployment rate forecast towards 4.40% for year 2021. Will the FOMC raise their “dots charts” to signal an interest rate hike much sooner, in 2023? Is it time to enter a 5s-30s Treasury yield curve flattener?

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