“This is far less than many of us had hoped for, frankly, but it’s far better than what some had sought,” said Mitch McConnell, the Senate minority leader, who said the bill retained Republican-preferred spending levels.

The framework negotiated by Reid and McConnell would fund the government at those Republican-backed levels through Jan. 15, 2014, and suspend the debt limit until Feb. 7, setting up another round of confrontations.

Eoin Treacy's view This agreement highlights the grudging nature of Washington’s political negotiation but nonetheless ensures that the risk premium attached to the market will be reduced and that monetary tailwind is likely to remain a significant bullish factor.

The choice of January 15th for funding the government and early February for the debt limit ensures that Janet Yellen is going to experience a tough first couple of months as Chairman of the Fed. The market is likely to assume that she is unlikely to embark on tapering while the political circus is in full swing. However it will be essential to concentrate on the statistics the Fed relies on to arrive at decisions i.e. growth, employment and inflation