Debt ceiling deal: What investors should watch for

President Biden and House Speaker Kevin McCarthy reach a tentative agreement on the debt ceiling. Yahoo Finance’s Executive Editor, Brian Sozzi details three things investors now need to watch for.

Video Transcript

BRIAN SOZZI: Brian Sozzi, Yahoo Finance here. And a tentative debt ceiling deal has been reached between President Biden and Speaker Kevin McCarthy. Now here are three things investors now need to watch out for as these debt ceiling talks come to the finish line. First up, the Fed meeting, the Federal Reserve will announce its latest on interest rates on June 14th. We have seen continued hot reads on inflation. The market is likely now ready to shift its attention to that meeting where, according to probabilities in the market, the Fed is expected to lift interest rates by another 25 basis points.

What does that mean for treasuries? And that's the second thing investors need to watch out for. We've seen treasuries all over the map during this debt ceiling discussion, or as some would call it, an all-out debacle here. If the Fed is expected to raise rates again, you may see another move higher in treasuries. And as an investor, you want to watch out what this might mean for tech stocks, like IN Apple, the red-hot Nvidia, Meta. Tech stocks historically love to see lower Treasury yields. But if the Fed is going to come out here and raise interest rates again, maybe that red-hot tech trade may not last, despite all the amazing things Nvidia is, in fact, working on.

And then the last thing, the last thing or the third thing you need to watch from an investor standpoint come that market open on Tuesday, want to see what happens to shares of SOFI, the student loan play. In this debt ceiling tentative agreement, the loan-- student loan forbearance freeze will end-- will end in September that could lead to more money going into the pockets for SOFI, which has been missing out on these payments, and seeing its bottom line impact. So come that market open, I am watching shares of SoFi, and other players that, in fact, play in the student loan space.