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NEW YORK — U.S. President Joe Biden and prime congressional Republican Kevin McCarthy have reached a tentative deal to lift the federal authorities’s $31.4 trillion debt ceiling, ending a months-long stalemate, two sources conversant in the negotiations mentioned on Saturday.
However the deal nonetheless faces a troublesome path to cross by way of Congress earlier than the US runs out of cash to pay its money owed in early June.
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COMMENTS:
THIERRY WIZMAN, GLOBAL FX AND INTEREST RATES STRATEGIST, MACQUARIE GROUP, NEW YORK
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“There’s definitely going to be a aid within the mounted earnings markets. The place there have been probably the most distortions from the uncertainty was within the credit score markets and within the Treasury invoice market… I believe on Tuesday, when the market reopens within the U.S., we must always see these two distortions mounted.
“However what this doesn’t clear up, is that alongside the entire Treasury curve yields have gone up lately. And I believe they went up in anticipation that there can be loads of issuance of Treasury bonds and notes and payments within the subsequent few weeks as a result of the U.S. Treasury has to replenish its money. And so, I believe Treasury bond yields will keep excessive for some time that offer is absorbed.
“And I believe shares can do okay, right here. This was definitely one overhang over the inventory market.
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“So far as the greenback goes, I’m inclined to assume that it might strengthen the greenback a bit of bit as a result of it would weaken the argument for de-dollarization. However not by a lot just a bit bit extra, as a result of the greenback has already strengthened in the previous few weeks fairly a bit.”
AMO SAHOTA, DIRECTOR, KLARITYFX, SAN FRANCISCO
“This can be fairly good for the market. I believe it would maintain the expectations nonetheless fairly pink scorching with how the Nasdaq has been performing. It will likely be good for equities.
“I believe it might additionally give extra cause for the Fed to really feel assured about attempting to elevate up charges once more. I believe the market may very well seize the chance to cost in a bit of bit extra tightening in June, in the event that they assume that every one else being equal, the financial system continues to be operating fairly scorching – we will see that. The elevate up in tech sector specifically. Spending has been fairly sturdy as nicely.
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“I believe this simply holds the greenback up fairly nicely as nicely. I believe, usually, all people ought to be fairly pleased with this, though we need to see what the what the colour of the deal appears like. Initially, it appears like that is coming extra from cuts proper, which is actually what the Republicans have been pushing for.
“And it’ll be necessary to see how lengthy the deal is for, whether or not … we’re going to face these identical points once more. Or whether or not these issues are going additionally going to be resolved with a long-term deal. I very, very a lot doubt it’s a long run deal.”
(Reporting by Laura Matthews Compiled by the International Finance & Markets Breaking Information group; Enhancing by Kim Coghill)
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