Beyond the debt ceiling vote, what’s next?

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The US government is yet on another rush to real an 11th-hour deal to push its debt ceiling after concession on some levels of spending cuts and fiscal policy prudence by the White House. This will give the financial markets the confidence to avert an economic disaster from a credit default. Now, analysts expect this reduced bill’s economic impact to be marginal. It will likely reduce a few tenths of the GDP in 2024 growth. The impact on the unemployment rate could be about an additional 0.1%. So things look pretty rosy and good.

Are we out of the woods?

We continue to be cautious even as the bill passes the House. For one, the Treasury must replenish its coffers and release large sums of treasury bills. This will likely spook up yield again and depress equity markets.

It is also likely to drain liquidity from the banking system at a time when many regional banks are trying to recover from the onslaught of outflow of deposits. Of course, we might also have smooth sailing in the grand place of things, but then we must take note of the possibilities ahead.

We will be with you as new development arises.

House Democrats to the rescue

Given that the number of Republicans that are against the bill is a lot larger than the party’s majority, Speaker McCarthy will have to rely on the Democratic votes to get the bill through the House.

Despite some Democrats being outspoken against the deal due to their objection to the work requirements for food stamps, which has seen a reduction, House Minority Leader Hakeem Jeffries clarified on Tuesday that Democrats would not let the country enter into default.

What’s on the menu today?

8.15pm ; ADP Nonfarm Employment
8.30 pm : Initial Jobless Claims
9.45 pm : Manufacturing PMI (May)
10 pm : ISM Manufacturing PMI (May)

A big economic data day with the vote undergoing, indeed.

It is 1 June, Thursday, 8.50 am in Singapore and 8.50 pm in New York. It is a rainy day, and we hope all your friends have a safe work journey. If you are having a school holiday, stay chill as we begin a new trading day of a new month!

What’s on the menu today?

We have important economic data on the inflation front.

8.30 pm: Core PCE Price Index (MoM) , Durable Goods Orders (MoM), PCE Price Index (YoY), Personal Income (MoM)
10 pm : Michigan Consumer Expectations (may) , Michigan Consumer Sentiment (May)