May 29, 2023 (MLN): Asian markets rose on Monday following the news that President Joe Biden and House Speaker Kevin McCarthy have reached a deal to lift the US debt ceiling and avoid a default, as APP reported.
The agreement, which suspends the debt ceiling until January 1, 2025, and includes curbs on federal spending, brought relief to traders and investors. Tokyo, Sydney, Hong Kong, Shanghai, Singapore, Taipei, Manila, and Wellington all saw gains in their respective markets.
While the deal was seen as a positive development, there is some nervousness among traders due to elements in the bill that could anger both Democrats and Republicans. The bill does not deliver the significant spending cuts sought by conservative Republicans, nor does it meet all the demands of progressive Democrats.
Nevertheless, the agreement prevents a catastrophic default, protects the economic recovery, and represents a compromise that no side is entirely satisfied with, according to President Biden and Speaker McCarthy.
Some critics of the bill, such as Republican Representative Dan Bishop, expressed opposition, suggesting that the agreement fell short of their expectations.
However, political analysts and business law professors viewed the deal as a win for President Biden and Democrats. It is considered a modest compromise that avoids a debt ceiling showdown or government shutdown for the remainder of Biden's presidency.
With the debt ceiling issue on the path to resolution, investors can refocus on the economic outlook. However, concerns remain about the precarious fundamental picture, despite the distraction of the debt ceiling fading. Data released on Friday, including the US Federal Reserve's preferred measure of inflation (the personal consumption expenditures index), showed a year-on-year rise in April.
This may increase pressure on the central bank to continue raising interest rates to control inflation, potentially challenging hopes for a pause in rate hikes in the near future.
Copyright Mettis Link News
Posted on: 2023-05-29T10:09:24+05:00
