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U.S.: Economy in suspended animation – JP Morgan

FXStreet notes that the U.S. Senate passed a 2.2 trillion USD stimulus bill to combat the devastating impact of COVID-19 and social distancing on the U.S. economy. These measures should be able to sustain the economy in a state of “suspended animation” for some time, according to David Kelly from JP Morgan Asset management.

“This bill could limit the damage to GDP growth to a very negative second quarter, with the economy then slowly beginning a recovery late this year and then surging once a vaccine has been put in place.”

“This package should be good for U.S. equities and other risk assets as it should leave U.S. corporations in a better position to weather the economic downturn and thrive in the rebound.” 

“It should ultimately be seen as a negative for Treasuries, as a commitment to do ‘whatever it takes’ today could both boost inflation and undermine the credit-worthiness of the U.S. government in the years to come.”

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