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It is a sign of how dominant the US debt ceiling issue is that the US reporting season, which starts tomorrow, is hardly being mentioned. Only the most wildly optimistic trader will have assumed that the war of words between the Republicans and Democrats will be resolved this weekend, as the parties look no closer to an agreement than they were several weeks ago. Markets are hoping that politicians will be able to put self-interest to one side for the greater good of the nation, though this is not something they are renowned for.
Even with an increased fear that the US will default, the sovereign debt market is behaving remarkably well. US ten-year debt yields have actually drifted lower over the last couple of months. With debt markets tending to give a clearer assessment of market conditions without the destabilising of individual equities, this demonstrates optimism.
Meanwhile, Alcoa open the US reporting season as usual, with Wells Fargo and JP Morgan following on Friday, and it will be interesting to see how much attention traders and investors afford the corporate picture.