Global financial media last night this morningThe headlines of common concern mainly include:
1. Biden said that negotiations will be effective and will reach an agreement on the debt ceiling and budget
2. U.S. Republican negotiators are subdued and no longer insist on a substantial increase in defense spending
3. “Borrowed” time is running out as the U.S. Treasury’s cash balance falls below $50 billion
4. The yen fell below 1 dollar to 140 yen, and Fed rate hike bets pushed up U.S. bond yields
5. Moody’s: Whether the United States can keep its AAA rating depends on June 15
6. Afraid of missing out on the U.S. stock market, big Wall Street firms began to reflect on their pessimistic predictions
Biden says productive talks will reach deal on debt ceiling, budget
U.S. President Joe Biden said talks on the debt ceiling and spending had been productive and the two sides would reach an agreement.
Speaking at the White House, Biden said he proposed a two-year spending freeze.
U.S. GOP negotiators back down on big defense spending push
According to people familiar with the matter, the U.S. Republican debt ceiling negotiators have shelved their demand for a large increase in defense spending and gradually began to accept the proposal in Biden’s budget for only a small increase in defense spending.
The narrowing of the gap between the two sides over defense spending represents a major victory for Democrats. Biden’s defense budget expenditure for next year is 886.3 billion US dollars, 3.3% higher than now, and the Republican Party has always hoped to further increase this figure.
According to unnamed sources familiar with the matter, the Pentagon will receive $842 billion in funding. The people asked not to be identified because a final agreement has not yet been reached.
‘Borrowed’ time running out: US Treasury cash balance dips below $50 billion
The U.S. Treasury Department’s cash balance has fallen to its lowest level since 2021, and the federal government may run out of funds early next month if the debt ceiling is not canceled or raised in time.
The Treasury’s cash balance fell to $49.5 billion on Wednesday, down from $76.5 billion the previous day and $140 billion on May 12, according to Thursday’s data. The Treasury’s cash balance has been under downward pressure recently due to a series of measures to avoid hitting the $31.4 trillion debt ceiling. Wednesday’s biggest one-day drop since May 15.
TD Securities strategist Gennadiy Goldberg said, “It just shows how close we are to the cliff now. Although some people in Congress question the mathematics of the Treasury Department, I think the cash balance is very telling. We are really going to get there soon.” Cliff. Frankly, this time is on borrowed time.”
Yen dips below $1/140 as Fed rate hike bets drive U.S. yields higher
The yen fell below 140 per dollar for the first time since November, as divergence between Japanese and U.S. monetary policies hit demand for the currency.
The yen fell as much as 0.4 percent to 140.01 yen per dollar, its weakest since November.
Traders on Thursday fully priced in an additional 25 basis points for the Fed’s next two policy meetings, with a more than 1/2 chance of a rate hike as soon as next month.
Meanwhile, U.S. yields rose, with policy-sensitive U.S. 2-year Treasury yields rising nearly 15 basis points to 4.52% at one point.
Moody’s: Whether the United States can keep the AAA rating depends on June 15
As the federal government is getting closer to running out of cash, investors are paying more attention to the US sovereign credit rating. Moody’s said that whether the US can maintain the AAA rating depends on whether it can pay the interest on its national debt in mid-June .
On June 15, the U.S. Treasury Department needs to pay about $2 billion in bond interest. Treasury Secretary Janet Yellen warned on Sunday that the chances of the U.S. government fully paying all its bills by June 15 are quite low if Congress does not raise the debt ceiling.
“This is a very important date for us,” said William Foster, senior vice president of Moody’s. Although the amount of interest that needs to be paid is not large, “if you miss the payment date, it is a default. We will put the U.S. sovereign credit Rating downgraded to AA1 from AAA.
Afraid of missing out on U.S. stock market, Wall Street’s leading firms began to reflect on their pessimistic forecasts
Strategists and portfolio managers who once thought there was no way for U.S. stocks in 2023 have changed their tune because they are now concerned about missing out on an underlying move.
Morgan StanleyAndrew Slimmon of the New York Times believes that his recent forecast that the S&P 500 will close near 4,200 in December this year is too low. The benchmark index could rise towards 4,600 by the end of the year as markets price in earnings recovery in 2024 and investor FOMO kicks in, the senior portfolio manager said in a phone interview.
“If I were a financial advisor, in October, November, I would start to get nervous because I was holding a lot of cash and not making money for my clients,” he said. It’s starting to come back into the market later this year.”
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