US Debt-Ceiling deal agreed in principle

US Debt-Ceiling deal agreed in principle

Over the weekend US President Joe Biden and House Speaker Kevin McCarthy agreed a deal in principle on the debt-ceiling. It now needs to pass in the House and Senate. The US Dollar index is holding above 104 today (Tuesday), its highest level since mid-March.

Stock-markets in Asia and Europe were generally lower last week. US stocks were pretty much flat except the technology sector which showed a strong out-performance.

US inflation data came in above expectations last week. The Fed’s preferred measure of inflation, the annual rate of Core PCE (excludes food and energy), measured 4.7% (4.6% expected) lifting the odds that the Fed will keep interest rates at current levels at least. The yield on the US 10yr Treasury reached 3.85 last week, its highest level since 10th March but has fallen back to 3.7 today.

In the UK the latest inflation data also anticipates a higher for longer stance on rates from the BoE. Although the latest year-on-year CPI number came in at 8.7% in April it was much higher than the 8.2% forecasted. The yield on the UK 10yr Gilt reached 4.43% last week but has retraced a little today (Tuesday).

UK Market Chart 26th May 2023

US Risk Barometer 26th May 2023

Europe Risk Barometer 26th May 2023

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