This summer the looming debt ceiling risks may take markets by surprise. Tentative progress has been made on reaching a deal, but negotiators are far from an agreement, and a potential default date could be as soon as early June. Event risks versus economic reality. This year risk performance and sentiment has been robust. This can partly be attributed to the fact that economic activity has been stronger than expected, but it also hinges on the fact that investors expect the Federal Reserve to start cutting interest rates quite aggressively after the summer. The latter seems implausible considering the economic ... (full story)