Halister News

(Bloomberg) -- Shift toward fiscal stimulus, whether initiated in the U.S. or abroad, should push global yield curves higher, RBC analysts write in client note.

• Economic re-acceleration after a change in policy emphasis would benefit loan performance and narrow credit spreads; corporate debt indexes would get a boost from any increase in materials prices
• Currency impact less clear-cut; expect dollar to weaken on global stimulus as capital likely to flow to countries with lowest starting rates when yields turn positive again
• Commodities should rise on demand pickup, particularly if stimulus is more focused on infrastructure
• In U.S. equities, combination of steeper curves and higher commodity prices would benefit bank, energy and materials most
  • An additional 20bps in GDP would lead to 100bps increase in corporations’ bottom line
  • International stock indexes have a substantially higher weight in financials, materials and industrials, which should benefit most from fiscal spending
• Any stimulus should have measurable impact on the economy and corporate profits in intermediate term and spur a market tone resembling an early-stage recovery or a mid-cycle re- acceleration
  • Suggest patience when investing; there will be opportunity to profit once more specific policy proposals are presented
• NOTE: Global growth to stay weak as calls for fiscal stimulus ignored, HSBC says
• NOTE: Draghi due to address a closed-door session of German lawmakers today, weeks after saying countries that have fiscal space should use it