Wall Street Today | Traders Ready to Embrace Riskier Assets After Debt-Cap Deal

President Joe Biden said he and House Speaker Kevin McCarthy reached a final agreement to avert a historic US default after the two spoke again Sunday afternoon. "We've got good news. I've just spoken with Speaker McCarthy. We have a bipartisan budget agreement,” Biden said to reporters at the White House. He urged both chambers of Congress to pass the legislation.

US employers are gradually offering some solace to Federal Reserve policymakers in their bid to wrangle still-elevated inflation. Government data on Friday are projected to show payrolls in the US increased by less than 200,000 in May, down from average monthly job growth of about 370,000 over the past year. Earnings are seen rising 0.3% from the prior month, when they posted the biggest advance in a year.

Global markets look primed for a relief rally after US negotiators agreed to a tentative deal over the weekend to resolve a debt crisis that has weighed on risk sentiment in recent weeks. US equity futures pushed higher in early Asia trading Monday, while their Treasury counterparts retreated. The US dollar, which has benefited from angst around the statutory borrowing limit, edged lower against some risk-sensitive peers.

"Markets should breathe a sigh of relief,” said Chang Wei Liang, a strategist at DBS Group Holdings in Singapore. “The deal appears well-balanced between reducing spending while not jeopardizing growth, and is likely to be a small positive for US Treasuries.”

The Russell 1000 index of large companies has gained 9.2% this year, beating the 0.7% advance of the small cap concentrated Russell 2000. That is the widest outperformance since 1997, when looking at years in which the Russell 1000 has been in positive territory through May 26.