The probability of a U.S. interest rate hike in June surges! U.S. debt may drag down the global economy!

Talks between Biden and McCarthy made progress this week, easing investor nervousness about a debt default, but the two sides are about $70 billion apart on when they can reach an agreement. With the arrival of the US "Fallen Warrior" holiday, the debt ceiling "X-Day" is approaching, and the time is approaching the possible "hard deadline" of June 1, the US debt ceiling issue will remain in the spotlight. US debt ceiling negotiations constrain the market. A sense of tension will shroud global financial markets before the "hard deadline" of June 1 proposed by Yellen to raise the US debt ceiling arrives.

In terms of data, the May non-farm payrolls report will be released next Friday. This is one of the indicators that Bob prefers to watch. The non-farm payrolls report can provide important clues for the Fed's next move. Signs of a cooling labor market will support the Fed's expectations of a rate cut. On the contrary, overly strong employment data will make the Fed believe that the US economy is not in recession, so it will delay expectations of a rate cut.

Calley said U.S. interest rates would likely have to rise "above 6%" for inflation to return to the Fed's 2% target. Eagle King Bullard said that the Federal Reserve may still need to raise interest rates by 50 basis points this year. Bostic said, "We are at the beginning of a difficult phase to control inflation." Fed Governor Waller also made hawkish remarks, saying that he does not support stopping raising interest rates unless there is clear evidence that inflation is moving toward the 2% target. decline.

After the release of U.S. PCE data on Friday, Mester said the data confirmed that inflation is still too high. The PCE data highlighted the slow pace of inflation's decline. The Fed's slow progress in lowering inflation is "worrying."

Data released on Friday showed that the U.S. personal consumption expenditures (PCE) price index rose 0.4% month-on-month in April. A year-on-year increase of 4.7% was higher than market expectations of 0.3% and 4.6% respectively. The core PCE price index in the United States increased by 0.4% month-on-month in April, hitting a new high since January 2023. U.S. durable goods orders rose 1.1% monthly in April, after market expectations for a 1.0% decline. Inflation has repeatedly... CME Group predicts that the probability of the Federal Reserve raising interest rates by another 25 basis points at the June 13-14 meeting has surged to 64%.