A U.S. debt ceiling deal may finally be within reach, but the closer we get to June 5 without a formal announcement, the more uneasy markets will become. U.S jobs numbers (Friday) are the key release this week for an economy that remains resilient, raising questions regarding the future path for interest rates. Markets now seem unsure about another hike but are more certain that rates will stay higher for longer, which will affect financing costs. The impact of higher rates was one of the primary reasons we recently raised our default forecast for U.S leveraged loans to 2.5% by March 2024 from 1.42% in April 2023.