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Deal Struck With One Week 'Til X-Date

CROSS ASSET
  • Equities, oil prices, are a touch firmer, while the greenback sits slightly lower in early European trade following the striking of an interim debt deal that now faces the House and Senate. The JPY is modestly firmer, suggesting the bulk of the reaction to a debt deal agreement was largely priced in.
  • The (very topline) takeaways are: debt ceiling suspended, Treasury has borrowing authority until Jan'25 (meaning no new debt ceiling debacle until after next election). Discretionary spending limits, phased-in expansion of work requirements and minor tweaks to energy permitting now apply.
  • McCarthy voiced his confidence that the deal will get sufficient support in the House to pass, although a few outlying lawmakers are having their voices heard in opposition to the deal.
  • Memorial Day keeps US markets under only a limited open, keeping focus on the market digestion of the votes in the House and Senate later this week. Congress could vote as early as Wednesday.

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