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LONDON (ShareCast) - (Sharecast News) - Government debt markets in the US were under selling pressure in the middle of the week after Democrats clinched one of two run-off votes for the country's Senate, possibly giving control of the upper chamber of Congress to his party, possibly implying greater government spending and taxes down the line.
On Wednesday, the Associated Press called one of the races in favour of Raphael Warnock, narrowing the Republicans' advantage in the Senate to 50-49.

A victory for the other Democratic candidate, John Ossoff, in his race, would give the Democrats control of both chambers of Congress and the White House, in what is known as a 'clean sweep'.

That is because the US Constitution gives Vice-President, Kamala Harris, the power to cast a tie-breaking vote in the Senate.

Traders in the Treasury market reacted quickly to the news that the Biden administration might be able to push through more of its economic policy programme much more easily.

As of 1530 GMT, the yield on the benchmark 10-year US Treasury note was climbing by 10 basis points to 1.06% and near its highest level since March 2020.

Yet analysts at Capital Economics were hot wholly convinced, telling clients: " even with unified control of Congress, we strongly doubt Biden will be able to get his most consequential legislative priorities passed.

"With most legislation requiring 60 votes in the Senate to avoid a filibuster, Democrats will either need to scrap the cloture rule entirely or use budget reconciliation, which requires just a simple majority but can only be used once per year."

So yes, Biden would have an easier time of it confirming his cabinet picks and the odds of a limited fiscal stimulus package being approved further down the line were a bit higher.

As well, the current relief package in the works might also be expanded, extending federal unemployment payments past March and providing further support, notable for state and local governments.

Furthermore, via the Congressional Review Act, Democrats "should also be able to reverse Trump's recent deregulatory actions, including a range of rules covering the energy and financial sectors."

But there were moderate Democrats in the Senate too, which had voted against a proposed Green New Deal in 2019 and "substantial" tax increases were also unlikely, they said.