LPL Research Market Signals Podcast

What 2021 Policies Could Mean for Your Investments

LPL Research

2021 policy is coming into focus as Democrats win majorities in both the US House and Senate. This may mean higher taxes but also more stimulus. Treasury yields are higher, but so are jobless claims. What’s next for stocks?

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2021 policy is coming into focus. Democrats are poised to take control of the US Senate, which would give them a majority in both houses of Congress. This will shift the policy outlook moderately to the left, but majorities are still razor-thin. Meanwhile, US Treasury yields are trending higher, but jobs numbers are down.

Focusing on the Future

The surprise wins in the Georgia Senate runoffs gave the Democrats control of both chambers of Congress, which could increase the odds of higher taxes (in 2022) and more regulation, but also more stimulus in the near term. Also, stocks historically have performed quite well under a “blue wave.”

Yields are moving higher

US Treasury yields increased after the Georgia elections, and the 10-year Treasury yield is finally back above 1% for the first time since the spring of 2020. With the possibility for more stimulus, along with an improving economy and higher commodity prices, yields likely will continue to trend higher. Value-style and financials equities may benefit from this move.

Jobs are weak again

140,000 jobs were lost in December, well beneath what was expected and the first negative month since April 2020. Only 56% of the jobs that were lost in March and April have come back, and it will take a long time for all of the jobs to return, unfortunately. Additionally, more weakness could be expected before the warmer months and COVID-19 vaccines are widely available. Manufacturing and services both remained strong in December, however, helping to offset the weak employment picture.

Chart - Should a Democratic Sweep Scare Markets? Probably Not

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Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the US and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunesGoogle Podcasts, or Spotify and find us on the LPL Research YouTube channel.




This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index data is from FactSet.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 


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