Bond & Stocks
US stocks fell and Treasuries dropped across the curve after another round of debt-ceiling talks ended without a deal. Investors have been demanding higher premiums to hold US debt, especially those at the highest risk of default, with little time left for politicians to find an agreement. Two-year yields rose 5 basis points to 4.37%. Four-week Treasury bills hovered at 5.43%, bringing their rise since the beginning of May to more than 60 basis points.
Economy
Federal Reserve policymakers are increasingly grappling with a critical question: How much should they weigh the adverse impact of their interest-rate hikes on banks against the goal of containing the fastest price increases in decades? The answer will play a major role in determining whether the Fed is steadfast in keeping rates elevated through year-end as officials expect, or cuts them as traders are betting.
World
Moelis & Co., the investment bank founded by billionaire Ken Moelis, is preparing for a rebound in dealmaking once the US Federal Reserve stops raising interest rates and there’s more clarity on the economy. “When it comes back, the M&A market will come back strong,” Chairman and Chief Executive Officer Moelis told Francine Lacqua in a Bloomberg Television interview at the Qatar Economic Forum on Tuesday. “We think we’re unlevered and we have a great opportunity to build the company in this downturn.”