There had been positive noises in recent days from both sides of the discussions in Washington, but the upshot is no agreement has been struck.
Markets have mostly shrugged off the impasse – after all, Congress has acted 78 times to permanently raise, temporarily extend, or revise the definition of the debt limit since 1960.
But they are wobbling now, and if Treasury Secretary Janet Yellen is right, the government will run out of cash on Thursday next week.
U.S. and global economic indicators, however, have been surprisingly upbeat lately, as broadly highlighted by the flash purchasing managers index reports for May. The feel-good factor around Japan continues – manufacturing is growing for the first time in seven months and service-sector growth is at a record high.
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