Bond prices rose on Friday and are moving higher this morning after the markets had a chance to review the financial regulatory bill moving through Congress and the comments from the G20 meeting in Toronto.
The consensus regarding the financial regulatory bill is that it will create two new government agencies and impose new fees and taxes to pay for these agencies. While the fees and taxes are on banks, hedge funds and other financial businesses, we all know these will be passed along to the end user, i.e., the consumer---you and me. In addition, as with any government regulation, economic growth will be stymied at a time when the U.S. economy can least afford it.
Over the weekend the Group of 20 largest industrialized nations met in Toronto to discuss global economic growth and the ballooning government deficits. The U.S. called for more stimulus while the European Union suggested austerity, so the end result, as is reflected in the bond and stock markets today, is that global growth will be limited. Slow economic growth supports the bond market.
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