Congress Fight Puts Spotlight on Timing for Potential US Default
- Government around $78 billion away from hitting borrowing cap
- Treasury still has extraordinary measures available to deploy
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Investors are intensifying their focus on just when the US government might run up against its statutory borrowing cap as the protracted fight over the House of Representatives speakership raises the risk that lawmakers will fail to agree on how to avoid breaching the ceiling this year.
A failure to lift or suspend the debt ceiling in time could trigger a technical default by the US or encourage credit assessors to downgrade the country’s rating — something Standard & Poor’s did in the wake of a previous debt-cap standoff in 2011. Given the potential for those kinds of events to upset global financial markets, traders are analyzing when that key date might be.