The Wall Street Journal has reported that the Biden administration said Sunday that ”talks over a $1.7 trillion infrastructure package would need to show a “clear direction” toward agreement by the time Congress returns from recess in early June, signaling that Democrats might be preparing to go it alone on a broad plan to rebuild roads and bridges, expand broadband service and create programs to help care for the elderly and disabled Americans.”
Markets are in anticipation of an outcome as lawmakers and the White House have been arguing over the basic questions of what should be included, how large it should be and how to pay for it.
However, to date, there have been no signs of a way forward since Republicans rejected the White House’s $1.7 trillion offer last week.
The Biden administration’s original $2.3 trillion plan was still too wide in the eyes of the GOP.
”The revised $928 billion counteroffers from Republicans includes only about $257 billion in new spending, raising concerns among Democrats,” the WSJ wrote.
”The White House has said the entirety of its $1.7 trillion plan is above current baseline levels of spending on infrastructure projects, though Congress will need to set new baseline spending by the end of this fiscal year.”
Meanwhile, Biden proposed a 39.6% top tax rate on capital gains and dividends for millionaires when he released his fiscal 2022 budget request to Congress on Friday, in line with the top rate the administration outlined in April.
This is part of tax increases on the rich to help fund the American Families Plan.
Capital gains tax is owed on assets like stocks, bonds, mutual funds and homes that have appreciated in value as a result, adding to the inflation story.
However, the bond market is not giving it as much attention as it might deserve judging by the performance of yields at the end of the week.
The US 10-year Treasury yield was lower at 1.5807% from 1.61% late on Thursday, compared with 1.6310% at the end of April.
In this respect, the US dollar remains bound to the lower end of the current bearish trend and gold prices are elevated:
Chart of the Week: Gold is going to be an exciting display of technicals
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