- Moving the markets
After weeks of political drama, Congress finally passed the debt ceiling bill last night, much to the relief of the traders who celebrated with a rally. The bill is now heading to the Senate, where it is expected to sail through smoothly. Sources say the Senate won’t rest until Biden signs it into law.
This is a big win for the traders, who can breathe easier without the looming threat of a default. But they shouldn’t get too comfortable, because another challenge awaits them in a few weeks: the Fed’s decision on whether to raise interest rates again.
The Fed has a tough choice to make, as the economic data is sending mixed signals. On one hand, jobless claims rose slightly from last week, staying near 18-month highs. On the other hand, ADP reported stronger than expected job gains, which would be great if not for the sluggish wage growth. So, what will the Fed do? My guess is they will go for a modest 0.25% hike.
Today’s rally was not a one-man show, but a team effort with most sectors joining in. Even the regional banking sector ETF KRE bounced back from yesterday’s losses. Bond yields fell back, but the US dollar took a bigger hit, dropping to its lowest level since January, as ZeroHedge noted. That gave Gold a chance to shine, as it flirted with the $2k mark but couldn’t seal the deal.Read More