Stocks Extend Gains On Debt-Ceiling Deal Rumors

US equity markets and bond yields are rising after Bloomberg reports, according to a person briefed on the discussions, that Congress and the White House are finalizing an agreement that would raise the debt limit until July 2021 and increase government spending for two years.

However, the short-term Bill curve remains ‘kinked’ around the debt-ceiling X-date for now…

Time is running short for the House to vote on the deal before they leave for a six-week recess on July 26.

If the budget negotiations can’t be concluded in time, lawmakers may decide to pass a debt ceiling extension into October. That would avoid the risk of a default in the short-term but would extend uncertainty for markets.

 


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