Markets nervous on Fed ceiling uncertainty, US yields rise

Markets were cautious on Tuesday, as the latest talks over the U.S. debt ceiling offered something for optimists and pessimists, leaving European shares just shy of last week’s 15-month top, and U.S. benchmark yields at their highest in two months.

President Joe Biden and House Speaker Kevin McCarthy could not reach an agreement on Monday on how to raise the U.S. government’s $31.4 trillion debt ceiling with just 10 days before a possible default.

However, both sides stressed the need to avoid default with a bipartisan deal and said they would continue to talk, leaving investors cautious about making large bets either way.

Europe’s broad STOXX 600 benchmark (.STOXX) slipped 0.2%, trading a little below Friday’s 15-month intraday high, largely looking through activity data that showed euro zone business growth remained resilient, if a touch softer than expected.

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