Treasuries Gain as Democrats Win House; Stocks, Dollar Decline
By Shamim Adam and Darren Boey
Nov. 8 (Bloomberg) -- U.S. Treasuries rose the most in a week and
stocks fell after Democrats won control of the House of
Representatives, giving the party more power to block government
spending increases and tax cuts. The dollar declined.
The Democratic Party picked up at least 27 House seats, ensuring
control for the first time in 12 years, and may win the Senate. The
victory may help opposition lawmakers push through measures to cut the
budget deficit and make it harder for President George W. Bush to pass
policies that support growth.
``It won't be as easy for Bush to throw cash at any situation,'' said
Orlando Green, a fixed-income strategist in London at Calyon, the
securities unit of Credit Agricole SA. ``That will put the budget in a
healthier position.''
The yield on the benchmark 10-year note fell 4 basis points, or 0.04
percentage point, to 4.63 percent as of 6:35 a.m. in New York,
according to broker Cantor Fitzgerald LP. Bond yields move inversely to
prices.
Standard & Poor's 500 Index futures expiring December lost 0.4 percent
to 1383.60. The dollar fell to 117.55 yen from 117.71 in New York late
yesterday and to $1.2794 per euro from $1.2775.
Democratic control of Congress may lead to higher taxes ``which Wall
Street perceives as bad initially but in the long run would shore up
the federal budget,'' Jeffrey Hirsch, editor of the Stock Trader's
Almanac, said before the election count.
Democrats have said they will allow tax cuts enacted under the
administration of President George W. Bush to lapse in 2010.
Republicans say lower taxes are needed to support the economy, which
slowed to a 1.6 percent annual growth rate in the third quarter, the
weakest in more than three years.
`Divided Government'
``It does create a divided government and that will create an amount of
paralysis,'' Robert Arnott, who helps oversee $17 billion as chairman
of Research Affiliates LLC in Pasadena, California, said in a telephone
interview. ``It's a matter of working out how a divisive government can
function.''
The Democrats have so far taken four Senate seats from Republicans in
the elections, short of the six needed for a majority. The fate of the
Senate now rests on the contests in Montana and Virginia. The White
House conceded control of the House shortly before midnight yesterday.
Congressional leaders from the Democratic Party have promised to
reintroduce pay-as-you-go budget rules if their party takes over
Congress. Those rules, which lapsed in 2002, would act as a check on
further tax cuts and increases in spending on entitlement programs such
as the Medicare health plan.
``Should Democrats take over both houses, the president may be forced
to adjust his policies,'' said Satoru Ogasawara, a foreign-exchange
analyst and economist at Credit Suisse Group in Tokyo. ``The dollar
could go lower in the very short term.''
Budget Deficit
The U.S. currency's decline was curbed today on speculation Democratic
efforts to shrink the budget deficit will lower the amount of
investment from abroad that the U.S. has to attract to maintain its
exchange rate.
Eventually, proposals ``to reduce the deficit would be favorable for
the dollar,'' said Michiyoshi Kato, a senior vice president of currency
sales in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan's second-
largest lender by assets.
The Congressional Budget Office forecasts the deficit will widen to
$286 billion in fiscal 2007, from $248 billion in the fiscal year ended
Sept. 30.
The dollar fell 26 percent against the euro from 2000 when the U.S. had
a budget surplus of $236 billion to 2004 when the budget became a $413
billion deficit at its peak.
To contact the reporter on this story: Shamim Adam in Singapore
[EMAIL PROTECTED]
Last Updated: November 8, 2006 06:40 EST
--- In obrolan-bandar@yahoogroups.com, "Sanjaya" <[EMAIL PROTECTED]> wrote:
>
> Hai semua,
>
> Diperkirakan partai Demokrat di Amerika bakal menjadi mayoritas di
> Kongres mengalahkan partai Republik G.Bush.
>
> Indeks Down Jones bakal melejit ngak ya??
>
> Khan kemenangan tsb menjadi pertanda datangnya angin perubahan
> menuju terbaik.
>
> Mohon komentar.
>
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