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Staff talks progress over the US debt ceiling, JPMorgan’s Dimon is frank about the banking turmoil, and the Fed’s Bowman warns rates may nee [View in browser]( [Bloomberg]( Staff talks progress over the US debt ceiling, JPMorgan’s Dimon is frank about the banking turmoil, and the Fed’s Bowman warns rates may need to rise. — [Liza Tetley]( Talks progress President Joe Biden and House Speaker Kevin McCarthy have postponed their Friday meeting on the debt ceiling, [leaving their aides to continue negotiations in a sign that staff level talks are yielding progress.]( The Biden-McCarthy meeting is said to be pushed back to next week. Staff level talks have been underway on government spending, following the Tuesday meeting between Biden, McCarthy and other congressional leaders. An agreement on spending could clear the way for a deal to raise the US borrowing limit. Meanwhile[, Treasury Secretary Janet Yellen told Bloomberg TV]( the only good outcome would be to raise the ceiling. Dimon says In a wide-ranging interview with Bloomberg TV, [JPMorgan’s Jamie Dimon said its time for regulators to help put an end to turmoil in the banking industry](. This may prove difficult, Dimon predicts, as policymakers are likely to take the wrong lessons from the upheaval and over-compensate with additional red tape: “I think it’s going to get worse for banks — more regulations, more rules and more requirements.” He said that regulators need to get a better handle on smaller banks’ financial situations, to avoid being “constantly” surprised. Despite the tumult, he said the regional-bank industry is quite strong, adding he believes it's nearing “the tail end” of the problem. Fed rate Fed Governor Michelle Bowman has said the [US central bank will likely need to raise interest rates further and hold them for some time]( if price growth and the jobs market don’t show signs of cooling. Speaking during a symposium at the European Central Bank in Frankfurt, she said she’s seeking signs of “consistent evidence that inflation is on a downward path when considering future rate increases, and at what point we will have achieved a sufficiently restrictive stance for the policy rate.” This comes after data last week showed that US hiring and pay gains accelerated last month, with the employment rate falling to a multi-decade low of 3.4%. Markets cheer Nasdaq and S&P 500 futures are rising as investors turn more bullish on stocks, with contracts on the indexes up 0.3% and 0.4% respectively as of 5:50 a.m. in New York. The risk-on sentiment is also pushing Treasury yields a tad higher. A measure of the dollar is strengthening, while oil prices decline, set for their fourth weekly loss. Meanwhile, gold is also on course to end the week lower. Iron ore futures are falling sharply for a second day, but still on track for a weekly gain. Coming up… At 8:30 a.m. we’ll get the US April Import Price index, then at 10:00 a.m. there’ll be the University of Michigan Consumer Sentiment report for May. At midday, the United States Department of Agriculture will release its May WASDE report. At 1:00 p.m., Baker Hughes releases its rig count. And then there’s a slew of Fed speaker in the afternoon, with Daly at 2:30 p.m., and Jefferson and Bullard both at 7:45 p.m. Earnings today include Emera, Air Canada. Is this year's debt-limit standoff going to be as bad as the one in 2011? Which asset is a buy if the US fails to meet its debt obligations? Share your views on our latest MLIV Pulse [survey](. What we’ve been reading Here’s what caught our eye over the past 24 hours: - [Tesla has recalled virtually every car it’s sold in China]( due to a braking and acceleration defect - Asia investors got a fresh reason to be bullish Friday on [news that top US and Chinese officials metÂ]( - [Airlines are reinvigorating first class](as deep-pocketed customers embrace travel again - Environmental safety fears surround the [new trade in Russian oil](which is more difficult to monitor - A [former Chicago commodities trader arrested and charged with fraud]( for lying to clients - Surprise [contraction in UK economy]( adds to confusion over Bank of England forecasts - [Paris plans on making the Seine clean enough for Olympians](bbg://news/stories/RUJ7CNTP3SHS) and, later, citizens, to swim in And finally, here’s what Garfield’s interested in this morning As the US debt ceiling deadline gets closer and closer, signs of alarm are starting to spread across markets. JPMorgan’s Dimon revealed his bank has a war room already set up to prepare for further turmoil. He also urged Republicans to ignore Donald Trump’s calls to permit a default in pursuit of their goals. President Joe Biden’s meeting scheduled for Friday with House Speaker Kevin McCarthy was postponed as staff continue to negotiate. Americans are left to ponder what Treasury Secretary Janet Yellen’s options are if no deal comes by June 1 and the government starts to run short of cash. Federal Reserve Bank of Chicago President Austan Goolsbee said a protracted showdown will make the central bank’s job much harder as it tries to assess the impact of bank-sector turmoil, which he said is leading to tighter credit conditions. The International Monetary Fund weighed in, warning of “very serious repercussions” for the US and the global economy if the nation defaults. Potential consequences include higher interest rates and broader instability. The worry for investors is things may need to get much worse before politicians will be driven to make things better. That’s the view from former Biden administration economic adviser Daleep Singh. “Market stress” is needed to allow for compromises in Congress, Singh says. A shock akin to 2011 — or even worse — may be needed, according to Sushil Wadhwani, a veteran hedge fund manager. Current and former leaders of the Treasury Borrowing Advisory Committee wrote to Yellen to say the costs of the standoff extend beyond markets to the time that financial firms are having to spend preparing for a possible default. For storied fixed-income manager Bill Gross, the whole “ridiculous” mess means it’s a good time to buy T-bills at elevated rates. Speaking of the absurd, the cost of insuring Treasuries against default now eclipses some emerging markets, including Greece, Brazil and Mexico. Read more in [The Weekly Fix.]( Follow Us Like getting this newsletter? 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