Investors were reassured by US House debt ceiling postponement.

May 31 (Reuters) Market emphasis now turns to the Senate and interest rate outlook after the U.S. House of Representatives passed a package to suspend the government's borrowing limit and avoid default.

After the law passed, Asian markets rose. S&P 500 futures moved from slightly negative to flat. Yields increased slightly.

The Senate must pass the bill and deliver it to President Joe Biden by Monday, when the federal government is anticipated to run out of money.

"It draws attention to the incoming data and the Fed meeting this month." It definitely eliminates one possible hurdle to the Fed acting this month."

The law would enable the Treasury to issue debt to satisfy its debts by suspending the federal borrowing limit until 2025. 

Two-year Treasury rates climbed 2.7 basis points to 4.417%, while currency markets remained stable.

However, investors anticipate the merger to approve. Senate discussion of the measure might take most of a week, and it must pass without revisions or return to the House.

Some experts attributed Wednesday's 0.6% S&P 500 drop to vote uncertainty. Year-to-date, the index is up roughly 8.9% and trading at its best levels since August 2022.

Over the last week, debt ceiling worries dragged on financial markets, but most investors anticipated an 11th-hour compromise.

A U.S. default is improbable but could devastate global markets, investors believe.

"Markets have taken the good news," Kiwibank chief economist Jarrod Kerr said. "It's been hushed... I believe Fed policy is back. I hope a solution will be reached and things will settle down, but there are dangers."



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