Stock markets recovered on Friday as traders cashed in profits on their recent shorts and as talks between President Joe Biden and House Speaker Kevin McCarthy appear to be inching closer, says Axel Rudolph, Senior Market Analyst at online trading platform IG.
Can a US debt ceiling agreement be reached in time?
“With US Democrats and Republicans squabbling over the last $70 billion, investors increasingly hope for a signed debt ceiling agreement before 1 June. The question is whether it'll be made in time as Congress breaks up for a holiday weekend? With UK and several European countries also enjoying a prolonged weekend, investors squared their positions on Friday, leading to a short squeeze and positive close on the day.”
US data points towards further Fed rate hike in June
“Stronger US data over the past couple of days, and a higher reading of the Fed's preferred PCE inflation gauge as well as stronger-than-expected personal spending, led to a rise in the probability of another rate hike being seen in June. According to the CME FedWatch tool, 44.3% of investors expect the fed funds rate to rise to between 5.00% to 5.25% in June and 55.7% to 5.25% to 5.50%.”
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