Fiscally incontinent Republicans out, bond market up
CNN reports on the the bond market's joy that some fiscal sanity might return to Washington, what with the anticipated demise of one-party Republican rule:
NEW YORK (CNNMoney.com) -- Treasury bonds rallied Tuesdays as investors bet that a change in control in Congress after the midterm elections could lead to greater fiscal discipline in Washington.
If the Democrats take control of the House, as expected, and possibly the Senate, which is less of a sure bet, that could make it harder for Republicans to cut taxes and Democrats to raise spending - the so-called gridlock that some experts say leads to less upward pressure on the federal budget deficit.
The bond market typically reacts well to more fiscal discipline since a lower budget deficit means the government has to sell fewer bonds to finance the deficit, which in turn helps support bond prices.