Nothing is decided yet - on any front.
With world markets still at an impasse on the extent of the economic slowdown and chance of recession, the U.S. debt ceiling impasse remains unresolved - and Tuesday's showdown at the White House is one of the few opportunities left to resolve it.
President Joe Biden and top Republicans and Democrats from Congress meet on Tuesday to move forward a three-month standoff over the $31.4 trillion U.S. debt ceiling before government runs out of money on June 1, risking a crippling default. Biden meets Republican House of Representatives Speaker Kevin McCarthy for the first time since February.
The Bipartisan Policy Center, a think tank that specializes in budget issues, largely chimed with Treasury's assessment of the time left before government is forced to default and on Tuesday put the crunch dates between early June and early August if the debt limit is not raised.
World markets wary of technical default and related hits to confidence and government spending remain biased toward an eventual resolution - as has typically happened in past episodes.
But risk premiums are building and time is running out.
There are only six days this month when the House and the Senate are in session when Biden is in Washington.
As one measure of that, one-month Treasury bill yields that mature just after the June 1 deadline are yielding 5.6% - some 35 basis points more than the upper end of the Fed's target policy rate and 55bp above the "risk free" one-month overnight index swaps rate.
Longer-term Treasury yields remain under wraps, however, with 2-year yields hovering just under 4%. And the dollar was firmer on Tuesday - comfortably above the year's lows.
DEBT CEILING
Beyond the debt ceiling row, the picture of the wider economy remains equivocal.
The U.S. labor market remained strong through April, according to the latest payrolls report on Friday.
While the rumbling banking stress since March amid the final throes of the Fed's swingeing rate rise campaign are seeing a tightening of credit standards and falling demand for loans, the overall readout from the Fed's quarterly loan officer survey on Monday showed the impact was less than many had feared.
In its semi-annual report on financial stability, the Fed insisted that bank failures seen over the past two months were "outliers" and the overall sector was more resilient.
Another key take on confidence from the banking disturbance comes later on Tuesday from the April NFIB small business survey.
Critical to whether the financial disturbance goes up another notch, of course, is whether the Fed is indeed finished raising interest rates and Wednesday's consumer price inflation report will be yet another huge data input to that thinking.
The picture overseas added another twist on Tuesday, however, with China registering an unexpectedly large fall in imports during the month - questioning the strength of domestic demand in the world's second largest economy after it reopened from strict COVID-related lockdowns earlier this year.
The first quarter earnings season is finally winding down, meantime, and estimates show the expected contraction of overall S&P500 earnings could be a low as 0.7% - compared to forecasts of a 5%-plus drop before the reporting period began.
After a quiet session on Monday, S&P500 futures are down slightly ahead of today's open, with European bourses mildly in the red too. The VIX index of implied U.S. stock volatility remains subdued at just 17.6.
Events to watch for on Tuesday:
* U.S. April NFIB small business survey
* U.S. President Joe Biden meets Republican House of Representatives Speaker Kevin McCarthy, Senate Majority Leader Chuck Schumer and top Senate Republican Mitch McConnell on debt ceiling impasse
* U.S. Federal Reserve Board Governor Philip Jefferson and New York Fed President John Williams speak. European Central Bank board member Isabel Schnabel speaks
* U.S. Treasury auctions 3-year notes
* U.S. corp earnings: Airbnb, Rivian, Wynn resorts, Duke Energy, Fox, Western Digital, Axon, Waters, Occidental Petroleum, Jacobs Solutions, Henry Schein, Electronic Arts, Celanese, TransDignCatalent, Akamai, Air Products and Chemicals
(By Mike Dolan, editing by Ed Osmond mike.dolan@thomsonreuters.com. Twitter: @reutersMikeD)
