Australian shares are set for a relief rally after the US finally cinched a deal to raise the country’s debt ceiling, ending weeks of pain for sharemarkets and bonds. Wall St and the FTSE are closed today for public holidays.
as US President Joe Biden and Republicans finally cinched a deal to raise the country’s debt ceiling, ending weeks of pain for sharemarkets and bonds.ASX futures up 70 points or +1.0% to 7245 near 4.17am AESTIn New York: BHP +3.0% Rio +2.9% Atlassian +4.6%On bitstamp.net, bitcoin was +2.3% to $US27,353 near 4.12am AESTIf Wall Street were open today, it would be ready for a relief rally.
The US dollar, which has benefited from angst around the statutory borrowing limit, will be in focus as another week of trading begins. Liquidity is set to be thin, although futures contracts referencing US Treasuries and the SThe debt ceiling compromise includes spending cuts but risks angering some lawmakers as they take a closer look at the concessions.
“We must raise the debt ceiling,” Federal Reserve Bank of Chicago President Austan Goolsbee said in an interview on CBS. “If you did not do that, the consequences for the financial system and for the broader economy would be extremely negative.”“Our assessment remains that central banks are at or near the top on rates as inflation pressures are likely to continue to ease - our US Pipeline Inflation Indicator fell further in the last week reflecting declines in PMI price surveys.
“The problem is that we are now seeing clear evidence that rate hikes are slowing the economy – with falling real retail sales, falling building approvals, slowing business investment plans and early indications of a slowing jobs market. At the same time inflation is off its highs and heading down.
“NAB expects the RBA to raise rates to 4.1 per cent by August, likely in July. Lowe is unlikely to give much guidance on the outlook from here, but likewise we don’t expect him to signal that the current bias towards additional tightening is limited to the risk of one additional hike.”“Markets should breathe a sigh of relief, with the dollar likely to soften a tad as the debt ceiling imbroglio is finally resolved.
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