us debt ceiling

  1. 13 Posts.
    I'm just back from a couple of months in the US. The dominant news story over that time has been about the debt ceiling and the political wrangling preventing it from being raised. Treasuries have been put on negative watch by Moody's and S&P. That's a lot more serious than people realise.

    Currently bond yields are suggesting everything will be fine and the political brinkmanship will pass, but as the Aug 2nd deadline approaches, expect to see the markets get jittery. If the 2 parties cannot reach agreement, expect a downgrade of US Treasuries, a collapse of the debt markets and a 'proper' GFC. China owns a fair whack of US debt, it'll push their economy to the edge, so don't expect us to duck this one!

    If they can reach agreement (and its not guaranteed) we should see a fair rally. In my mind, this is the biggest threat to any bulls out there. Hedge time maybe!

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