Bonds & Stocks
Treasuries slightly cheaper across the curve with long-end underperforming, pushing 5s30s spread toward steepest levels of the day into early US session. Bigger losses hit gilts, where front-end and belly yields are cheaper by more than 3bp on the day. US session has busy economic data slate and a 5-year note auction, following strong reception for Monday's 2-year sale.
Economy
A signature policy of the Biden administration - the American Rescue Plan - left households flush with cash and supported spending through the pandemic. Now the runway for consumption may be running out. Adjusted for inflation, we estimate the average household in the bottom 40% of the income distribution now has liquid assets worth $1,200 less than they did before Covid.
World
China is pushing back against mounting investor pessimism toward the world's second-largest economy. The central bank stepped up support for China's slumping currency on Tuesday by setting the daily reference rate far stronger than estimates. The move came a day after a prominent finance writer and two of his peers were suspended from a social media platform for spreading "negative and harmful information" about the nation's faltering stock market.