(News Bulletin 247) – The Paris index rose in mid-session as the US House of Representatives approved the bipartisan agreement to raise the debt ceiling. The ball is now in the Senate’s court.

After the purge of the last sessions – the CAC 40 has lost more than 200 points in three days – the Paris Bourse is starting a small rebound. The CAC 40 thus won 0.7% on Monday at mid-session at 7151.35 points, thus going back above 7100 points.

The slight upturn in risk appetite is fueled by the milestone reached by the agreement between Republicans and Democrats to raise the US debt ceiling. This text was approved by a very clear majority (314 votes for, 117 against) overnight from Wednesday to Thursday in the House of Representatives. The US Senate must now decide on this agreement for it to enter into force and avoid a default by the United States.

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Towards large US debt issues

Still, in the event of a favorable vote, the market could ask itself certain questions. A deal means the US Treasury will have to line its pockets, issuing hundreds of billions of dollars in debt. According to JPMorgan estimates quoted by Reuters, this could represent 1.1 trillion dollars over seven months of “T-bills”, short-term bonds. This could potentially weaken market liquidity.

“Bond markets estimate that the Treasury will need to issue around 750 billion additional bonds over the next few months to raise funds,” said Stephen Innes of SPI Asset Management. “The big question is whether this will result in a significant tightening [du marché, NDLR] which will cause the dollar to rise sharply and equity markets to fall,” he added.

The market will pay close attention this afternoon to data from the ADP cabinet for May on US employment in the private sector, a more or less good approximation of the official data which will be published on Friday.

These statistics are likely to move the market, judge Naeem Aslam of Zaye Capital. “It’s important to keep in mind that the US labor market is still robust and a lot of labor market related indicators are still as robust as they were before the Covid crisis, which means the Fed [la Réserve fédérale, NDLR] should worry less about recession and focus more on inflation,” he said.

Casino ever lower

As for values, Casino continues its interminable descent into stock market hell, falling 8.7% and losing more than 20% over all of the last five sessions, including that of this Thursday.

Rémy Cointreau fell by 0.1% after publishing results for the 2022-2023 financial year without surprise and confirming its outlook for the current financial year.

On other markets, the euro advanced 0.07% against the dollar to 1.0696 dollars. Oil prices are down a bit. The contract for delivery in August on Brent North Sea yields 0.3% to 72.39 dollars while that of July on WTI listed in New York lost 0.4% to 67.80 dollars a barrel.