- Investors are seeking a higher premium for US debt most at risk of default after yet another round of discussions on the borrowing limit ended without a deal.
- Four-week Treasury bill yields rose 3.5 basis points on Tuesday, increasing the total increase since the beginning of May to more than 60 basis points. The yield on the two-year Treasury yield climbed by 7 basis points. After a dismal day on Wall Street, US equity futures were barely moved.
- In Europe, stocks fell after statistics revealed that manufacturing production in the region contracted at the quickest rate since the pandemic three years ago.
- The debt-ceiling drama has dominated global markets, with time running out for American officials to negotiate an agreement. Biden and House Speaker McCarthy described their Monday talks as productive, but a solution to avoid a catastrophic US default remains elusive. With only a few days until June 1, when Treasury Secretary Yellen suggested her department would run out of cash, traders were on pins and needles. Any agreement would have to be ratified by Congress before that date.
- Iraq Oil Minister: We are committed to OPEC+ cuts.
- HSBC: We now expect 25bps rate hikes in June, July and September, taking the ECB’S deposit rate forecast to 4.0%.
- IMF: The UK economy will avoid a recession this year.
