Bonds tell us not to count on a quick implementation of a large US fiscal expansion. Yields are

Bonds are telling us two realities:

• Bonds tell us not to count on a quick implementation of a large US fiscal expansion. Yields are coming down because though global growth outlook is rosier, a fiscal driven boom may be just too premature. Too much politics is hindering Trump. The recent failure to repeal Obamacare was a signal, as its repeal would have lessened pressure off the US budget deficit and provides room for tax cuts.
• Bonds also tell us Fed will not rush to tighten more than needed. The Fed, after two hikes in past few months, may go ahead as scheduled for two more rate hikes this year. However, as per recent FOMC officials’ remarks, it doesn’t seem the Fed is in a particular hurry to hike in the immediate term horizon. Even if it does, this is coming from record low interest rates and record low yields since the global financial crisis.