- White House drops tax hike demand as part of debt deal
- Senate Dems propose $2.7 in cuts, no tax hike, no entitlement reform
- Republicans propose 2 stage 2.7% trln in cuts
- UK Chancellor Osborne: UK to stick to fiscal consolidation plans
- Chicago Fed NAI rises to -0.46 in June from -0.55 in May
- European bank shares fall 2.8% after Moody’s downgrade of Greece
- CME raises margin requirements on US Treasuries raised
- Dallas Fed index at -2 in July from -17 in May
- ECB funding to Greek banks at EUR 103 bln at end-June from EUR 97.5 at end-May
- IMF sees only modest US growth until 2012; must deal with debt issue
- Italy cancels bond auctions for August
- S&P 500 falls 0.6% to 1337
- US 10-yr Treasury yield rises 4 bp to 3.00%
It was a surprisingly pedestrian US trading session despite warnings from the White House and the US Treasury that if House Republicans did not bend to the will of President Obama that financial markets would panic. Oddly, the White House got that prediction wrong as well/
EUR/USD ends the US session an immaterial 15 pips above where it ended the Friday session at 1.4375. We traded the typical risk-on, risk-off pattern for much of the day despite what one would consider a stacked deck against the dollar. Just as the euro was oddly stable during its time of crisis in recent weeks, the greenback is trading in very controlled fashion less than a week before Uncle Sam is slated to go broke (though better tax receipts put that date in play…)
One breakthrough seems to have happened today: The Senate Dems and the White House dropped their demand for higher taxes as part of a debt ceiling deal, a sign of slow but steady shift in the debate in the Republican’s direction. The White House has just announced a speech from Obama for 01:00 GMT. Oh, goody. We know have something to look forward to tonight.