Market Outlook

Throughout last week, financial markets were driven by the U.S. debt ceiling debate. Equities were dragged down as the White House and congressional leaders struggled to find a mutually agreeable resolution. However, Thursday’s news of deal progress led to a sharp rise in equity markets on Friday.  This progress continued into the weekend as a concept deal was agreed upon; markets will now look for it to be finalized this week.

U.S. growth stocks outperformed last week, led by Nvidia Corporation’s meteoric rise following a strong earnings report and optimism about future earnings due to growth in artificial intelligence.

International developed equities fared worse as the U.K.’s Consumer Price Index (CPI) report came in well above expectations, indicating continued inflationary challenges. Germany reported that its economy shrank in the first quarter, its second consecutive quarter of contraction.  

Chart of the Week

The U.S. Treasury’s cash balance has been facing tremendous pressure due to the ongoing debt ceiling issues.

With a current cash balance below $50 billion, and the x-date revised to June 5, a resolution looks to be coming just in time; the Treasury will then look to refill its cash reserves over the coming months.

Though negotiations to raise the debt ceiling are progressing, credit agency Fitch Ratings placed the United States’ AAA rating on “Rating Watch Negative” for a potential downgrade.

View Chart of the Week