Asia open: Baked beans or Lobster

Stephen Innes SPI Asset Management

Happy Monday Morning from Bangkok.

Broader market sentiment will likely tango to the mood music in Washington as the debt ceiling discussion evolves. President Joe Biden and House Republican Speaker Kevin McCarthy will meet after a reportedly"productive" phone call on Sunday as the president returned from the G7 summit. And while the mood is far doom, traders still have 2 feet on the pedals.

It seems pretty likely that a full-fledged deal will be reached before early June, but the timing is hard to predict. While negotiation strategy and political incentives imply a last-minute deal, we will soon find out if it's baked beans or lobster during the Memorial Day holiday.

The US Dollar is trading lower partly due to the debt ceiling standoff but more likely due to the Fed officials being more open to a June pause.

As global investors tap dance around the debt ceiling debate and with G-7 out of the way, it could be time to start rummaging through collateral damage in China after growth data fell off a cliff. Still, with the Yuan above 7.00 and the market unlikely to receive any immediate policy support, any upside will require China to regain positive momentum in industrial activity data or, failing that, the start of a Fed easing cycle.

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

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