With the Senate tied at 50 seats for each party and Vice President elect Kamala Harris having the deciding vote, the Democrats control the White House, Congress and the Senate. This control will make it easier for President elect Joe Biden to enact legislation that fulfills his agenda. The markets assume that increased government spending on a variety of items from infrastructure and increased unemployment benefits, to small business grants will provide a stimulus for the economy that will result in greater economic growth.

With this increase in growth, the equity markets will likewise expand at the cost of higher interest rates. The 18 basis point gain in the 10 year treasury rate since last Monday directly reflects this relationship.

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