The US30 has dropped through support after Germany’s disappointing GDP growth print.
US30 – Daily Chart
The US30 has support at the 33,000 level, and that is the key to the week ahead, with targets at 31,500 and 34,000.
House Speaker Kevin McCarthy faces a rebellion from some of his party members over his deal with President Joe Biden to suspend the debt ceiling. The deal will now face a vote on Wednesday.
President Biden said he “feels good” about the deal, which the House Rules Committee will consider on Tuesday before a vote expected Wednesday.
Some hardline members of the Republican party said they wouldn’t vote for the bill saying McCarthy’s deal doesn’t go far enough to cut spending. It marks a “betrayal” of their terms. Rep. Dan Bishop said he is considering a move to relieve McCarthy of his speaker role. “It is inescapable to me. It has to be done.”
Thursday will bring economic data in the form of US manufacturing PMIs. That will be followed on Friday by Non-Farm Payroll employment numbers. Analysts expect to see an additional 190k jobs added to the economy after last month’s 253k.
“In short, tomorrow’s bill is a bunch of fake news and fake talking points and does nothing to rein in out of control federal spending,” said Rep. Lauren Boebert. “If every Republican voted the way that they campaigned, they would vote against tomorrow’s bad deal.”
Florida Governor Ron DeSantis, the latest candidate for the Republican 2024 presidential nomination, said the deal does not do enough on spending.
He told Fox: “After this deal, our country will still be careening toward bankruptcy.”
The week ahead could see significant volatility for US stocks as a failure to reach a deal would be “catastrophic”, Treasury Secretary Janet Yellen said.
“There’s still a huge disconnect between bond markets and equities. The bond market is implying there is an extreme 70% probability of a US recession in the next year. These signals stand in stark contrast to the resilient equity market,” said James Rosenberg of Ord Minnett.