Do congress members trade on insider information? We answer this old question from a new perspective by investigating if there is any relation between the abnormal returns of stock trades by congress members and economic policy uncertainty. Using congressional stock trading data for 2014-2022, we find a positive relationship between economic policy uncertainty and short-term abnormal returns of congress members' stock purchases, adjusted for S&P 500, size (year-end market capitalization) or Fama-French 12-industry benchmarks. The positive association is stronger among stocks of industries that are more intertwined with policies set by Congress members. We additionally explore bills sponsorship (and committee assignment, work in progress) as a mechanism through which politicians may obtain information against uncertainty. These findings remain robust after accounting for the possibility that politicians obtain firm-specific insider information from corporate insiders. This paper is the first to show the connection between politician stock trade performance and an economic indicator that is also closely related to the information privilege politicians attain from their work in policymaking.

Reaching for yield (RFY), which could arise from investment decision(s) made under regulatory constraints, from principal agent problem, from simply trying to achieve higher performance, or when interest rates were low, is a well-documented phenomenon in various types of financial securities, assets, and markets. This article studies the effect of mandated post-trade transparency among corporate bonds on the secondary market RFY. Defining RFY as the difference between a bond's yield and the average yield of bonds within the same rating category and using the difference-in-difference method, the results show that increased transparency from TRACE Phase 2 is associated with a rise in RFY of disseminated bonds. One potential driver of this effect is the increased demand for disseminated bonds by life insurers, but not P&C insurers. In line with the existing literature, these higher-RFY bonds have lower future returns. When RFY is measured with the market-wide average yield as the benchmark, RFY increases for higher-rated bonds and decreases for lower-rated bonds during the period TRACE was progressively introduced. This suggests that transparency may have had contrasting effects on better-rated and lower-rated bonds.