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Trump’s Second Act: What to Expect in 2025 and Beyond

Even with Republicans poised to control the White House, the Senate, and the House of Representatives, slim congressional majorities could hinder the president’s efforts to enact his agenda.

Bond Markets Overlook U.S. Debt Trajectory, For Now

by Libby Cantrill, Richard Clarida of PIMCO, 2/26/24

Debt levels will likely continue to rise absent policy changes, and the yield curve is likely to steepen.

What to Expect From Divided Government

by Libby Cantrill of PIMCO, 11/19/22

A split U.S. Congress in 2023 will likely limit fiscal policy, but could be positive for equity markets.

How Can Policymakers Improve the Functioning of the U.S. Treasury Market?

by Libby Cantrill, Tim Crowley, Jerry Woytash, Jerome Schneider, Rick Chan of PIMCO, 9/12/22

Widening participation in the Fed’s standing repo facility and bond buying programs could mitigate another liquidity crisis in the Treasury market.

A Dizzying Summer in D.C. as U.S. Debt Ceiling Looms Again

by Libby Cantrill, Jerome Schneider, Jerry Woytash of PIMCO, 8/31/21

A busy summer on the fiscal front in Washington that’s seen progress on budget and infrastructure legislation could soon give way to another showdown over the U.S. statutory debt ceiling, potentially signaling volatility for investors in the months ahead.

We Have a Deal: U.S. Infrastructure Spending Soon, Tax Increases Likely Later

by Libby Cantrill of PIMCO, 7/9/21

A bipartisan deal on infrastructure spending would likely be followed by a separate partisan deal funded by tax increases.

U.S. Regulators to Leveraged Loan Issuers: Just Do It (Transition to SOFR)

by David Forgash, Libby Cantrill, Bryan Tsu of PIMCO, 6/30/21

Leveraged loan issuers have lagged other fixed income market issuers in moving to SOFR as a reference rate, posing potential risks to investors as the year-end deadline approaches.

Will Taxes Rise in the U.S.?

by Libby Cantrill of PIMCO, 3/29/21

Democrats could begin working on a tax bill later this year, but resulting tax hikes may be weaker and less of a headwind to growth than some fear.

Fiscal Spending Could Cause a U.S. Growth Spike – Compounding Investors’ Concerns on Inflation

by Libby Cantrill, Tiffany Wilding of PIMCO, 2/24/21

A large fiscal package geared toward pandemic relief will likely boost U.S. growth even further in 2021, but long-term inflationary risks are still balanced.

A Narrowly Democratic Congress Could Boost Spending and Growth

by Libby Cantrill, Tiffany Wilding, Allison Boxer of PIMCO, 1/8/21

With a narrowly Democratic Congress, U.S. fiscal spending is likely to increase on economic relief from the pandemic, infrastructure, and healthcare, boosting the economic rebound.

First the Election, Now the Governing: Fiscal Policy Priorities, Challenges, and Implications

by Libby Cantrill, Allison Boxer of PIMCO, 11/13/20

Washington will likely focus on fiscal stimulus immediately – but given the realities of governing and the pandemic, economic recovery will take time.

Six Key Questions on U.S. Policy and the Economic Outlook

by Libby Cantrill, Tiffany Wilding of PIMCO, 5/13/20

The U.S. political focus has shifted to the reopening of the economy.

Economic Fallout: Here Comes Congress!

by Libby Cantrill, Tiffany Wilding of PIMCO, 3/31/20

The $2.2 trillion stimulus is the biggest ever, but Congress will likely be forced to do even more.

Economic Fallout: Here Comes Congress?

by Libby Cantrill, Tiffany Wilding of PIMCO, 3/19/20

A bolder fiscal response to the rapidly spreading coronavirus has become an economic and political imperative.

Momentum Favors Biden for Democratic Nomination, But the Race Isn’t Over

by Libby Cantrill of PIMCO, 3/9/20

Senator Joe Biden is the current front-runner in a two-person race for the Democratic nomination, but upcoming state contests are crucial.

March May Matter More for Investors Watching U.S. Primaries

by Libby Cantrill of PIMCO, 2/4/20

We think investors should not extrapolate too much from who wins the early contests, including Iowa.

Year‑End Tailwind: De‑Escalating Policy

by Libby Cantrill of PIMCO, 12/19/19

The U.S.-China trade deal is one of three diminishing policy risks, but investors shouldn’t assume that all policy uncertainty has been eliminated.

U.S.−China Trade Deal: A Temporary Reprieve

by Libby Cantrill of PIMCO, 10/17/19

Without pouring water on the “love fest,” we contend that the deal struck between China and the U.S. leaves much to be desired.

Impeachment Could Be Both Bad News and Good News for Trade Policy

by Libby Cantrill of PIMCO, 10/3/19

We believe the impeachment inquiry could have an adverse impact on the ongoing U.S.–China trade conflict, but there may be a silver lining for NAFTA 2.0.

Trade Tension Flare‑Up: Not So Surprising

by Libby Cantrill of PIMCO, 8/6/19

We think investors should take President Donald Trump at his word that he will move forward with the next round of tariffs on China come September.

New U.S. – Mexico Tariffs Would Add to Economic Costs

by Libby Cantrill, Tiffany Wilding of PIMCO, 6/6/19

New U.S. tariffs on Mexico would add to the direct economic costs of the string of tariff hikes enacted during this administration.

The Pivot in U.S.-China Trade Policy May Herald Long‑Term Tension

by Libby Cantrill, Tiffany Wilding of PIMCO, 5/23/19

With the U.S. and China raising tariffs on each other’s goods, we may be entering a prolonged period of trade tension.

The Economic Cost of the U.S. Shutdown Showdown

by Libby Cantrill, Tiffany Wilding of PIMCO, 1/22/19

While we believe the shutdown on its own would have only a modest impact on growth, the...

U.S. Policy Outlook for 2019: Trade Risks Continue, But Might Not Escalate

by Libby Cantrill of PIMCO, 1/15/19

In our outlook for 2019, we believe politics and policy out of Washington will continue to drive – and in some cases, weigh on – markets, much like they did in 2018. Investigations and manufactured crisis are likely to contribute to uncertainty. Trade tensions persist, though on a more positive note, relations between the U.S. and China seem to be improving.

Key Takeaways From the U.S. Midterms: What a Split Congress Means for Markets

by Libby Cantrill, Scott Mather of PIMCO, 11/8/18

The U.S. midterm elections played out much as expected, with Democrats picking up the 23 seats (and more) needed to retake the majority in the House of Representatives and Republicans easily defending their majority in the Senate.

U.S. Midterm Election Preview: Policy Gridlock Ahead

by Libby Cantrill of PIMCO, 11/1/18

If you live in the United States, it is hard to escape news of the upcoming midterm elections on 6 November. But for investors, are these midterms really significant?

Could Trade Turmoil Be an Economic Spoiler for the U.S.?

by Libby Cantrill, Tiffany Wilding of PIMCO, 8/7/18

Even before President Trump’s inauguration, we at PIMCO had identified trade policy as a potential spoiler to the otherwise pro-growth nature of the president’s economic agenda. And the unfolding of this “summer of discontent” has only affirmed our view heading into 2018 that trade policy remains one of the biggest policy risks for markets and the economy this year.

The Summer of Discontent on Trade? Deadlines, Headlines and Escalation Catalysts

by Libby Cantrill of PIMCO, 6/7/18

Consistent with our thinking back in January 2018, trade has dominated the policy agenda in Washington and cast a pall over certain segments of the market. We continue to maintain that President Trump should be taken at his word regarding trade policy...

Trade Tensions Mount: What It Means for Growth

by Libby Cantrill, Tiffany Wilding of PIMCO, 4/10/18

Consistent with our view last month that the Trump administration’s more significant (and market-moving) trade actions had yet to come, the recent announcement of tariffs on Chinese products related to the Section 301 intellectual property investigation has roiled markets and increased uncertainty over the possibility of a trade war.

Uniform Mortgage‑Backed Security Initiative (‘Single Security’)

by Libby Cantrill, Michael Cudzil, Daniel Hyman, Kent Smith of PIMCO, 4/4/18

Many of us who grew up as children of children of the Great Depression may recall our parents imploring us to “Stop throwing good money after bad!” in any number of situations, even if we didn’t always heed their wisdom.

Trump, Tariffs and Trade: Three Takeaways for Investors

by Libby Cantrill, Tiffany Wilding of PIMCO, 3/16/18

We believe the trade actions with the most significant potential economic and market impact have yet to unfold.

U.S. Housing Finance Reform: Why Fix What Isn’t Broken?

by Libby Cantrill, Michael Cudzil, Daniel Hyman, Kent Smith of PIMCO, 2/14/18

The topic of housing finance reform has come in and out of focus on Capitol Hill since Fannie Mae and Freddie Mac (the government-sponsored enterprises, or GSEs) were taken into conservatorship back in 2008.

U.S. Policy Outlook for 2018: Expect Action on Trade and Government Spending

by Libby Cantrill of PIMCO, 1/18/18

Although much of 2017 represented a series of fits and starts in Washington, the Trump administration and the Republican-led Congress ultimately – and against long odds – delivered on one of their biggest campaign promises: a relatively sweeping rewrite of the tax code, representing a likely boost to 2018 U.S. real GDP of 0.2%–0.3%.

Tax Reform: There’s Will, But Is There a Way?

by Libby Cantrill of PIMCO, 11/29/17

Congressional Republicans’ efforts to reduce taxes and reform certain elements of the U.S. tax code have been impressive thus far. In a matter of weeks, the House has passed its version of a bill, and the Senate is hoping to take up its own bill later this week.

Will Fannie and Freddie Draw From the Treasury? Much Ado About Nothing …

by Libby Cantrill, Michael Cudzil, Daniel Hyman, Kent Smith of PIMCO, 10/13/17

Policymakers in Washington have recently expressed growing concerns about the (planned) dwindling of capital levels at Fannie Mae and Freddie Mac – the two government-sponsored enterprises (GSEs) that help finance the vast majority of U.S. mortgages.

Tax Reform: Challenges Ahead

by Libby Cantrill of PIMCO, 10/2/17

With great fanfare, the White House and Republican congressional leadership released their long-awaited framework for tax reform, but many politically thorny issues need to be resolved – and quickly – before investors can feel confident that tax reform will materialize in the coming months.

Congress’ Must‑Do List Is Looking More Doable, but After That …

by Libby Cantrill of PIMCO, 9/7/17

After an uncharacteristically eventful August in Washington, Congress returns to D.C. for an even busier fall: In September, it has a mere 12 legislative days to fund the government for fiscal 2018 (and thus avoid a shutdown), raise the debt ceiling and address a smattering of other must-pass bills...

Housing Finance Reform: First Things First

by Libby Cantrill, Michael Cudzil, Daniel Hyman, Kent Smith of PIMCO, 7/20/17

Why is the U.S. housing sector diminishing when demand for housing remains robust?

What the Latest Healthcare Hiccup Means for the U.S. Economy

by Libby Cantrill of PIMCO, 6/29/17

The effort to repeal and replace “Obamacare” hit yet another stumbling block this week when U.S. Senate Majority Leader Mitch McConnell decided to pull the bill from consideration after realizing he did not have sufficient votes for it to pass.

Higher Mortgage Rates Are Likely With Proposal of ‘Single Security’

by Libby Cantrill, Michael Cudzil, Daniel Hyman, Kent Smith of PIMCO, 5/2/17

The Federal Housing Finance Agency’s proposal to increase liquidity and reduce costs to taxpayers could actually lead to reduced liquidity and higher mortgage rates.

Trump’s First 100 Days: Should Investors Take Notice?

by Libby Cantrill of PIMCO, 5/1/17

Looking at several metrics – legislative achievements, staffing in key areas and executive orders – President Trump’s first-100-day track record has been mixed.

Healthcare Reform’s Demise: Tax Reform Will Be Hard, Too

by Libby Cantrill of PIMCO, 3/28/17

After the healthcare bill stalled in the House of Representatives, the most salient question is what’s next?

Market Response to Trump’s Speech Doesn’t Change Policymaking Realities

by Libby Cantrill of PIMCO, 3/2/17

The market’s overwhelmingly favorable reaction to President Trump’s first speech to a joint session of Congress was not necessarily surprising: President Trump veered away from the more protectionist and nationalistic tone of his inaugural address to instead deliver a more hopeful, conciliatory and unifying speech.

The Pace of Trump’s Policy Agenda: Three Big ‘Ifs’

by Libby Cantrill of PIMCO, 2/24/17

It’s hard to believe that U.S. President Donald Trump has only been in office for a month, given the dizzying activity in Washington. Yet our observations from before the inauguration seem to be holding true, at least so far: Governing is indeed harder than campaigning.

While a possible central counterparty (CCP) failure is a very remote event, there is no one single solution that alone will prevent it. However, PIMCO believes that if several conditions are met, including 1) a CCP is capitalized correctly and sufficiently with its own skin in the game, 2) segregation of client assets are consistent across cleared derivatives, 3) CCPs have a way to access cash easily to manage liquidity and 4) stress tests are consistently performed and reviewed, a CCP will be much more likely to recover than to be forced into a resolution process.

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