Debt Deal and Fed Squeeze: What's Next for Markets?
TL;DR Summary
The US debt ceiling is expected to be lifted this week, but investors are now pricing in the likelihood of higher Federal Reserve interest rates and the evaporation of any 2023 easing hopes. Futures markets see a 60% chance the Fed will lift rates by another quarter point to the 5.25-5.50% range at its June 14 meeting. With the debt deal set to tighten fiscal policy further out and fears of credit rate downgrades and default receding, U.S. 2- and 10-year Treasury yields fell about 5 bps on Tuesday compared with Friday's close.
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- Market Has Many Questions After Debt Ceiling Deal RealMoney
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