DISASTER AVERTED IN US! Stocks Finish Higher

 | Oct 17, 2013 04:26AM ET

A deal has been reached to raise the debt ceiling and open the U.S. Government for three months. This is a temporary solution that comes just hours before the Treasury runs out of money.

Democratic Senate Majority Leader Harry Reid and Mitch McConnell (R) announced this agreement around noon yesterday. It passed Congress after Texan Republican Ted Cruz said he would not use procedural moves, like a filibuster, to delay the vote.

His agreement is extending the Treasury’s borrowing authority until February 7. They wil also have the means to extend it borrowing capacity as well if Congress fails to reach an agreement to early next year. Government agencies would have funds till January 15, 2015.

STOCKS
The Dow was up over 205 points to close at 15,373.83. That is a 1.36 percent gain. The S&P 500 shot up over 23 points or 1.38 percent to finish the day at 1,721.54. The tech heavy Nasdaq Composite was up 45 points or 1.2 percent to close at 3,839.43.

Asian equities were higher as investors bought on risk on after last night deal in Congress. The Nikkei is now at a two and a half week high, after jumping over one percent and above 14,600. We have not been this high since October 1. The yen, however, moved off its three week low versus the dollar. This paused the Nikkei’s gains.

The Australian S&P/ASX is now above 5,280 which is its highest level since September 30. The Shanghai Composite was up 0.50 percent and the South Korean Kospi rose 0.40 percent.

CURRENCIES
The EUR/USD (1.3544) is also up as it is being supported by the 2 year spread between the German and U.S. bonds. In the medium term picture we are still range bound from 1.346 to 1.364.