Tonight, congress will vote on the bill agreed by President Joe Biden and House Speaker Kevin McCarthy, as the US tries to avert X-date by raising the debt ceiling. According to Reuters, “the deal caps federal spending and forces more poor people to work for food aid, concessions that Democrats hate. But it also preserves much of Biden's Inflation Reduction Act and punts the next debt ceiling showdown into 2025, which Republicans hate.”
Next week, Rishi Sunak will fly to Washington to meet with President Joe Biden where it is expected the two leaders will discuss supply chains, decarbonisation, Northern Ireland and multi-lateral aid to Ukraine. One item which is not expected to feature on the minutes however is any progress on striking a bilateral trade agreement between the US and UK. The FT yesterday citied a No.10 spokesperson yesterday stating that “the UK was no longer seeking a trade deal with the US.” This comes seven years after Barack Obama warned Britons that the UK would be at the “back of the queue” in any trade deal with the US if the country chose to leave the EU and comments yesterday then suggest that the negotiations to try to arrange a deal (which started in 2020) have failed. With the US being the UK’s largest bilateral trading partner and largest export market outside of the EU, striking a deal was seen of great importance.
Nvidia Briefly Touches $1tn Market Cap
Investors continued to look favourably on Nvidia yesterday, with its stock price rising close to 4%. The California-based technology company which manufactures chips has recently seen a meteoric rise in its share price, having soared 24% after its recent financials beat Wall Street’s expectations with sales projections doubling existing forecasts. Nvidia’s chips power AI applications such as ChatGPT while big tech companies and cloud computing providers also rush to upgrade components and technology. Yesterday’s rally saw the company briefly exceed a market cap of $1tn joining companies including Apple, Microsoft, Alphabet, Amazon and Saudi Aramco whose capitalisation consist of thirteen figures.
Spanish Inflation Comes in Softer-than-expected.
Yesterday, Spanish CPI came in softer-than-expected at 3.2%, hitting its lowest level since July 2021 as energy costs subside. This was a sizeable drop from April’s level of 4.1% and gives some hope that inflation will continue to ease across the board as the decline in wholesale energy prices feed into lower costs for heating, travel and freight. All eyes are now on Italian CPI at 10:00 ahead of German CPI at 13:00. This will be followed by Christine Lagarde speaking, where the markets will be looking to gain any insight ahead of the ECB’s rate decision on 15 June.
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