It looks like the U.S. election is yielding a decisive verdict, and that’s good news. Risky assets like stocks and cryptocurrencies are up sharply on the promise of less regulation and further tax cuts from a Republican-led government.

In less bullish news, the Treasury market continues to sell off, with a rate backup that began in mid-September. The US 10-year yield at 4.45% this morning is up 83 basis points from 3.62% on September 16 and back to the same level as July 1, 2024, and September 2023, before that.

In September 2023, the U.S. consumer price index rate of change (CPI) was 3.7% year-over-year, compared to 2.4% this September. The US Federal Funds rate was at 5.33% versus 4.83% today.

But that’s where the good news ends. Fixed credit rates follow Treasury yields. Yesterday, the benchmark U.S. 30-year mortgage rate was 6.72%, up more than half a percent from 6.13% in September 2023.

Financial conditions have eased further for the largest publicly traded corporations reporting record profits.  However, times are more challenging for the bulk of the economy—households and small businesses—that get their funding through the banking and private lending system.

Something’s got to give. Euphoric pricing in publicly traded corporate securities makes it harder for the U.S. Fed to deliver monetary easing.  The Powell-led Fed wants to ease interest rates for Main Street, but that’s not happening yet.

Eventually, even large public corporations need growing demand from the private sector to keep their revenue and earnings forecasts moving higher. Attaining those targets is now more challenging.