US stocks fell and short-dated Treasuries held on to losses as negotiations over the debt ceiling remained at an impasse. House Speaker Kevin McCarthy told Republicans the talks still have some distance to go and pleaded with members of his party to stay united on their demands. The S&P lost 1.1% while the NASDAQ slumped 1.25%. Some House Republicans questioned whether the default date is as close as Treasury Secretary Janet Yellen says. She has warned that the Treasury risks not having enough money to meet all of its payments until a wave of tax receipts is expected on June 15. Lowe’s Cos. cut its sales outlook, citing a slowdown in consumer spending. Meanwhile, in economic news, US new home sales unexpectedly rose to a more than one-year high. US business activity grew in May by the most in over a year. In Europe, stocks were weaker after data showed manufacturing activity in the region shrank at the fastest pace since the pandemic three years ago.

Treasuries from belly out to long-end of the curve ended richer on the day while front-end erased most of its early losses after it became clear that negotiations to raise the US debt ceiling remained at an impasse. Yields from 5-year sector out to long-end of the curve ended richer by as much as 1.4bp, while 2-year pared an increase of 9bp to less than 3bp.

A gauge of dollar strength tested a two-month high before paring gains, the Australian dollar and the New Zealand dollar were lagging most peers in the Group of 10. The Reserve Bank of New Zealand is forecast to hike rates again.

• USD/JPY little changed at 138.60
• AUD/USD fell 0.7% to 0.6608
• NZD/USD fell 0.6% to 0.6248
• EUR/USD fell 0.4% to 1.0768

Crude futures gained after Saudi Arabia’s top energy official issued another warning to oil short-sellers, just over a week before the OPEC+ alliance is due to meet.

Analytics by,

Lenny Hayes 

Chief Technical officer of Tradehall