Markets Rally as Debt-Cap Deal Boosts Risk Appetite.
Global markets are expected to rally after US negotiators reached a tentative deal to resolve the debt crisis that has weighed on risk sentiment in recent weeks. US equity futures rose while Treasury counterparts retreated and the traditional haven yen dipped. The US dollar, which has benefited from angst around the statutory borrowing limit, edged lower against some risk-sensitive peers. Investors had flocked to safety in recent weeks as the so-called X-date rapidly approached. The prospect of a US default has been a boon for the dollar, with the greenback advancing against all of its G-10 peers this month. Treasury market investors have remained optimistic about the prospects for a debt deal, with swap traders now pricing in about a quarter-point rate hike over the next two Federal Reserve policy meetings, implying the central bank will be able to retain its focus on fighting inflation.