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This week in Bidenomics: Markets get twitchy

President Biden got good news on the economy this week. Employers added 379,000 jobs in February, nearly twice as many as economists expected. The biggest gains came in leisure and hospitality, signaling the beginning of a recovery in the sectors hit hardest by the coronavirus pandemic. Job gains could accelerate in future months.

But financial markets are rattled, offsetting some of the optimism. An abrupt rise in interest rates during the last month finally led to a rollover in stocks, with the NASDAQ tech-heavy index down 8.4% since Feb. 12, and flat for the year. The S&P 500 has lost less since Feb. 12 and is up 2% on the year. Stocks have been on a monster rally since last March, so nobody’s losing their shirt. But recent market volatility reveals investor concern about inflation, Federal Reserve policy and unprecedented levels of federal borrowing needed to fund some $6 trillion in stimulus spending since last March.

Interest rates on the benchmark 10-year Treasury spiked from 1% on January 27 to 1.55% on March 5. Rates remain low by historical standards, but they’ve jumped by a lot in a short period of time. That represents changing market expectations about the direction of the economy. That’s probably a good thing, but it can cause modest losses in stocks. There’s an outside chance markets are sniffing out trouble ahead. Biden never promised to be the Stock Market President, but stocks should rise if a real recovery takes root. And he did promise a recovery.

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