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Debt Ceiling Agreement to go to House Vote

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.”

With the Republicans currently maintaining a majority in the House, all eyes are on whether McCarthy will be able to secure enough of a backing to get the bill though. One Republican Representative Dan Bishop however called for the resignation of the Speaker, though McCarthy dismissed such calls. Notwithstanding some dissenters, GOP Representative McHenry has indicated that over 50% of Republicans back the deal while McCarthy is confident that the vote will pass. The bill has already been passed by the House Rule Committee and 218 votes are now needed for passage in the 435-member house and if approved, the bill will advance to the Senate, where 60 votes are required to pass.

UK-US Trade Agreement Dead in the Water

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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UK Inflation Eases to BoE Target, But Challenges Remain

Word of the week Wednesday, UK inflation falls to BoE's 2021 target, May 2024 reported as warmest May on record, and lower-than-expected US retail sales.

RBA Hold Rates for a Fifth Consecutive Time

Travel Tuesday, benchmark rate remains unchanged by RBA, rising wage growth across the continent, rising oil prices, and Farage announces Reform 'contract'.

French Election Special

Macro Monday, first official day of campaigning in France, RN party's fiscal plans leaves markets considering implications, political and economic uncertainty leaves French stocks under pressure, and what's happening this week.

Labour Release Manifesto

Friday feeling, yesterday's release of the Labour party manifesto, introduction of National Wealth Fund under a Labour government, and additional funding for Ukraine from G7.

Fed Issue Forward Guidance as Policy Makers Hold Rates

Thought for Thursday, benchmark policy target rate maintained by the Fed, signs of more easing than expected for US inflation, and today's events.

Conservatives Reveal Manifesto Ahead of Labour’s Launch Today

Word of the week Wednesday, manifesto from the Conservative party released yesterday at Silverstone, Labour party manifesto set to release today after making criticisms, data shows sharp decline

In Focus: America’s TCJA

Travel Tuesday, focus turns to the Tax Cuts and Jobs Act as the US election draws closer, UK unemployment data, and wage growth comes in marginally higher than expectations in the UK.

European Parliamentary Elections

Macro Monday, fallout from provisional European Parliamentary election results dominate headlines, French President calls for snap election, and what's happening today.

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