Relief for investors came this week when a bipartisan deal to raise the $31.4tn US debt ceiling – and prevent the US from defaulting on its financial obligations – was agreed and presented to Congress on Monday morning. The details of the deal include historic reductions in spending and consequential reforms that will lift people out of poverty into the workforce, Speaker of the United States House of Representatives, Kevin McCarthy, said, although there will be no new taxes and no new government programs. The bill will be put to a vote as early as Wednesday (31 May) in the House, followed by the Senate later in the week or this weekend and with the aim of getting it passed before 5 June.
Attention again turned to data on US unemployment and the persistent tightening of the labour market. Last week data showed that initial claims for state unemployment benefits came in lower than market forecasts but increased 4,000 to 229,000. With a raft of unemployment data coming soon focus will be placed upon the Fed’s next moves in relation to rate hikes once they have also digested the latest inflation data.