“Debt Deal Countdown: How to Turn $70 Billion into a Winning Lottery Ticket!”

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Artificial Intelligence and U.S. Debt Diplomacy Dominate the Week’s End

As the week comes to a close, markets are taking a breather from the excitement over the blowout forecast from chipmaker Nvidia Corp and the follow-through rally in AI-related companies that powered the Nasdaq’s best day in three weeks. Meanwhile, all eyes are on the U.S. debt ceiling debate, with President Joe Biden and top Republican lawmaker Kevin McCarthy $70 billion apart on discretionary spending.

Here’s a closer look at what’s been happening in the markets:

Stock Markets Take a Breather

  • Markets are taking a breather after the excitement over Nvidia Corp’s forecast and the follow-through rally in AI-related companies.
  • The Nasdaq had its best day in three weeks.

Japan’s Nikkei Maintains Momentum

  • Japan’s Nikkei maintained its momentum after data showed inflation again well above policy targets.
  • Foreign money is pouring into the market.

The U.S. Debt Ceiling Debate

  • President Joe Biden and top Republican lawmaker Kevin McCarthy are $70 billion apart on discretionary spending, according to a person familiar with the talks.
  • Treasury’s announcement of a slate of bill auctions for early next week had some market participants suggesting the debt ceiling’s so-called “X-date” may not be June 1.
  • Funding for discretionary spending on military and veterans is on, as per sources.

Federal Reserve Rate Hike

  • Markets are growing less confident that the Federal Reserve will keep rates on hold in June.
  • The CME FedWatch Tool now puts the chances of a quarter-point rate rise to 5.25-5.50% on June 14 at more than 50%.

Key Developments on Friday:

  • U.S. Commerce Department’s personal consumption expenditures (PCE) price index figures for April, which could show a small rise similar to March.
  • ECB’s Philip Lane and Croatian central bank Governor Boris Vujcic speak at events.

As markets close out the week, the buzz around artificial intelligence and U.S. debt diplomacy continues to dominate. Investors are keeping a close eye on the U.S. debt ceiling debate, while growing less confident that the Federal Reserve will keep rates on hold in June.

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