(MarketWatch) There’s a lot of worries to go around, from trade tensions with China to Britain’s possible abrupt exit from the European Union and now, political turmoil in debt-laden Italy. More on that in a bit.
But closer to home, Congress very quietly negotiated more stimulus in what has been mostly overlooked, or at least little discussed, in markets.
The call of the day comes from Macroeconomic Advisers, which points out that the Bipartisan Budget Act of 2019 will add to growth over 2020 and 2021. It took its GDP forecast for 2020 to 2.4%—an upgrade of 0.6 percentage points—in large part due to the legislation.
With that forecast in mind, the Macroeconomic Advisers team forecasts a 20% gain in the S&P 500 this year—it’s 17% as of Thursday—and bond yields to “trend slowly higher” but not breach 3% until the middle of 2021 at the earliest.
The forecast does come with an asterisk—if the planned 10% tariffs on $300 billion of Chinese goods, and Chinese retaliation, aren’t reversed quickly, the outlook could change.
