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Data: FactSet; Chart: Axios Visuals

Reduced inflation and stimulus expectations are combining with a notable uptick in coronavirus cases in the U.S. and especially in Europe where there is fear a second wave of the virus could again cause businesses to close and dent the global economic recovery.

The intrigue: That would normally provide a boost for bond prices and precious metals, but gold and silver are instead following inflation expectations lower. And government bond yields have fallen nearly as low as they can without the Fed resorting to negative interest rates, says Subadra Rajappa, head of U.S. rates strategy at ‎Société Générale.

  • "Treasuries don’t have anywhere to go from here," Rajappa says, noting that she expects to see yields on the benchmark 10-year note stay between 0.5% and 1% given the massive U.S. budget deficit and weak demand at recent Treasury auctions.

What to watch: Gold and silver prices have fallen meaningfully in the last two weeks, with gold down 5.5% and silver down 18% since Sept. 1. But Axel Merk, president and portfolio manager at Merk Hard Currency Fund, says he expects this will be a bump in the road on the way higher.

  • "In the long run we’ll be cranking a boatload of money and spending a boatload of money but in the short-term inflation expectations have come down a bit, which is very consistent with what happens in a risk-off environment."

Go deeper

Dion Rabouin, author of Markets
Dec 17, 2020 - Economy & Business

Fed chairman Jerome Powell is (still) here to save financial markets

Illustration: Eniola Odetunde/Axios

Fed chair Jerome Powell sought to reassure financial markets at the Fed's latest policy meeting that even though the economy is improving faster than expected, the housing sector has "fully recovered" and equity markets are hitting all-time highs, the Fed isn't even close to thinking about raising U.S. interest rates.

Why it matters: The bonanza in the stock and housing markets have been buoyed by expectations for the continuation of rock-bottom rates and an avalanche of Fed bond buying.

Focus group: Former Trump voters say he should never hold office again

Illustration: Sarah Grillo/Axios

"Relief" is the top emotion some swing voters who used to support Donald Trump say they felt as they watched President Biden's swearing-in, followed by "hope."

Why it matters: For voters on the bubble between parties, this moment is less about excitement for Biden or liberal politics than exhaustion and disgust with Trump and a craving for national healing. Most said Trump should be prohibited from ever holding office again.

Updated 12 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Eniola Odetunde/Axios

  1. Health: Most vulnerable Americans aren't getting enough vaccine information — Fauci says Trump administration's lack of facts on COVID "very likely" cost lives.
  2. Politics: Biden unveils "wartime" COVID strategyBiden's COVID-19 bubble.
  3. Vaccine: Florida requiring proof of residency to get vaccine — CDC extends interval between vaccine doses for exceptional cases.
  4. World: Hong Kong to put tens of thousands on lockdown as cases surge.
  5. Sports: 2021 Tokyo Olympics hang in the balance.
  6. 🎧 Podcast: Carbon Health's CEO on unsticking the vaccine bottleneck.