Macro Briefing: 12 May 2023

* US cities prepare for surge of migrants after change of immigration rules
* House passes bill to restrict flow of immigrants into US
* Fed’s Bowman says more rate hikes needed if inflation, job market stay strong
* Debt ceiling meeting between Biden and congressional leaders postponed
* Uncertainty persists about exactly when Treasury will run out of cash
* Regional bank stock remain volatile as PacWest Bancorp shares sink
* Corporate bond market may offer opportunity in debt-ceiling crisis
* US wholesale inflation continues to ease in April
* US jobless claims rise to 1-1/2 year high:

Credit-default swaps market is pricing in the potential for trouble with “risk-free” US Treasuries due to the ongoing impasse in Washington over raising federal debt ceiling. “Look at the credit default swaps market and you get a sense of how much the United States is being hurt by these debt ceiling crises,” says Richard Bernstein at Richard Bernstein Advisors. New York Times financial columnist Jeff Sommer reports: “I looked. While the probability of an actual debt default is still low, the cost of insurance for U.S. bonds over the next 12 months was about 50 times the price for Germany and about three to seven times that of countries like Bulgaria, Croatia, Greece, Mexico and the Philippines. That’s according to FactSet data. Over longer periods — three, five and 10 years — the cost of insuring against a U.S. default drops.”