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Debt ceiling deal a huge relief but focus now switches to the jobs report

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It’s been another uninspiring session on Tuesday with traders buoyed by the deal reached on the debt ceiling but still concerned about inflation and interest rates ahead of the jobs report on Friday.

A massive step forward on the path to avoiding default

The debt ceiling distraction is almost behind us, with the House and Senate expected to vote this week on the deal that was reached between President Joe Biden and House Speaker Kevin McCarthy over the weekend.

That will put an end to fears of a US default, or at least talk of it as the outcome itself was almost certainly never going to happen. We can now get back to focusing on the actual risks facing markets and the economy this year, being inflation and interest rates, and whether optimism over the end of the tightening cycle was premature.

The jobs data on Friday is the next big test and considering how little progress has been made elsewhere to this point, you have to wonder whether the central bank has it in them to not hike again if we see another strong report. I’m sure many would like to but the fact is the economy is still displaying remarkable resilience and until that changes, not tightening may be viewed as more of a gamble.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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Former Craig

Former Craig

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
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