2021 may see record stock market highs with Yellen as Treasury Secretary

U.S. President Biden’s decision to select Janet Yellen as U.S. Treasury Secretary could help stock markets reach all-time highs this year.

Joe Biden’s inauguration as the 46th President of the United States on Wednesday signifies a new era bolstered by certainty, stability and a return to established norms. All things the markets favour.

That said, after the pomp and ceremony of the inauguration, investors’ eyes are now on Janet Yellen, who will take over from Steve Mnuchin as U.S. Treasury Secretary.

As I was quoted by Forbes, USA Today, The Street and The Guardian, amongst other media, during her testimony in Congress earlier this week, Ms. Yellen – the former Fed chair – urged lawmakers to ‘act big’ on Covid stimulus, particularly with interest rates at record lows.

Whilst at the Federal Reserve, Ms Yellen was an advocate for full employment, and her track record shows that she is willing to spend.

As such, with Ms Yellen at the helm of the finances, I believe we’ll see huge spending in the U.S. and historically low interest rates for years to come.

This will act as a catalyst for stock markets.

Following Ms Yellen’s testimony in Congress, the greenback edged lower as investors turned their attention away from safe-haven assets and towards stocks, highlighting a higher degree of confidence in the markets.

Indeed, as the markets experienced their best performance during the time between the presidential election and inauguration for any president going back 50 years, it’s important that investors ride the so-called ‘Biden Bounce’. But they must do it with caution.

Ms Yellen has shown that she’ll do whatever it takes to revive the economy, so we can expect to see substantial government spending under the Biden administration and ultra-low interest rates to be maintained by the Federal Reserve.

As always, there will be highs and lows, but I think that with these policies, we may see markets produce perhaps higher highs this year than in 2020.

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