Debt Ceiling Dynamics
Monday’s deadline remains in place for Congress to grant fresh spending authority to the US government, but investors are already looking past it to the more serious debate around the debt ceiling. Yesterday, Treasury Secretary Lew pointed specifically to Oct. 17 as the key date to watch, after which debt ceiling constraints could put the US at risk of default.
We have been here before of course. Many investors will recall the debt ceiling deadline of Aug 2011, and the fact that the situation was ultimately resolved. This is no time for complacency however given the severe market moves ahead of, and after, the US downgrade that followed.
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