Market Brief, North America

Yields and the dollar continue to push higher after minutes taken during the Federal Reserve’s May meeting seemed to show policymakers questioning whether regional bank turmoil would meaningfully slow inflation. According to a record published yesterday, “Several participants noted that if the economy evolved along the lines of their current outlooks, then further policy firming after this meeting may not be necessary,” but “Some participants commented that, based on their expectations that progress in returning inflation to 2 percent could continue to be unacceptably slow, additional policy firming would likely be warranted at future meetings.”

Markets are stuck in a state of suspended animation after President Biden and House Speaker McCarthy emerged from last night’s talks without a deal to raise the US debt ceiling. According to Biden, the two leaders agreed that a “default is off the table,” and McCarthy said “The tone tonight was better than any other time we have had discussions”. McCarthy called the talks “productive” but said “we don’t have an agreement yet,” with both noting that differences over tax changes were lengthening the standoff. An earlier statement from Treasury Secretary Janet Yellen said “we estimate that it is highly likely...