NEW YORK, May 27 (Reuters) – U.S. President Joe Biden and top Republican Congressman Kevin McCarthy have agreed to raise the federal government’s $31.4 trillion debt ceiling, ending months of impasse, two sources familiar with the talks said on Saturday. : .
But the deal still faces a tough road through Congress before the money to pay off the United States’ debt runs out in early June.
COMMENTS.
THIERRY WIZMAN, GLOBAL FX AND INTEREST STRATEGIST, MACQUARIE GROUP, NEW YORK
“There will certainly be relief in fixed income markets. Where the most distortions from uncertainty were in the credit markets and the Treasury bill market…I think on Tuesday when the market reopens in the US. , we should see that those two distortions are corrected.
“But what that doesn’t address is that yields across the entire Treasury curve have risen recently. And I think they’re up in anticipation of a lot of issuance of Treasury bonds, notes and bills over the next few weeks. because the US Treasury needs to replenish its cash And so I think Treasury yields will stay high for a while, that supply will be absorbed.
“And I think stocks can do well here.
“As for the dollar, I tend to think that it might strengthen the dollar a little bit because that would weaken the argument for de-dollarization. But not much, just a little more because the dollar has already strengthened. quite a bit in the last few weeks.”
AMO SAHOTA, Director, KLARITYFX, SAN FRANCISCO
“This will be quite good for the market. I think it will still hold expectations of how the Nasdaq has performed. That will be good for stocks.
“I think it could also give more reason for the Fed to feel confident in trying to raise rates again. I think the market could actually take advantage of a little bit more price tightening in June if they think that, all else being equal, the economy is still pretty hot, we could see that. In particular, growth in the technology sector has picked up. Spending has also been quite strong.
“I think this holds the dollar quite well as well. I think overall everyone should be happy with it, although we want to see what the color of the deal looks like. At first it looks like this. more of the right cuts that Republicans really wanted.
“And it’s going to be important to see how long the deal lasts, whether … we’re going to run into the same issues again, or whether those issues will also be resolved in a long-term deal. I highly, highly doubt it’s a long-term deal.”
Reporting by Laura Matthews Compiled by the Global Finance & Markets Breaking News team; Edited by Kim Coghill
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