Bob Janjuah on the debt ceiling discussions:
Any surprise will likely come from the US rather than the euro zone and centres on the risk of no deal being reached on the debt ceiling. If that becomes the market consensus over the next few weeks, then my 1250 and maybe also 1220 S&P bear alert levels should come into play. I think USD and USTs would rally if the debt ceiling deal were not to materialise. The knee-jerk reaction may be to sell USTs and USD, but no deal on the debt ceiling would I feel ultimately send a very positive message to the bond vigilantes that the US is serious about getting its fiscal house in order. Risk markets on the other hand would likely see such an outcome as ultimately very negative, as uber loose policies have been and are the main support and driver of risky asset valuations. At this juncture, however, I see a short-term fudge as the more likely outcome.