The US Treasury Bill market remains notably inverted around the uncertain timing of the US debt limit debacle. As Bloomberg reports, while Treasury bills maturing in October continue underperforming against November and December securities, the market has a murky view on the drop-dead date for the U.S. debt ceiling.
In a note released on Monday commenting on the looming US debt ceiling showdown and the growing threat of a government shutdown and technical default by the US, Compass Point analyst Isaac Boltansky said he is becoming increasingly concerned that fall deadlines for federal government funding and the debt ceiling will prove tougher than the market currently expects, resulting in ” markets roiled heading into 4Q and Fed’s policy normalization trajectory facing complications.” He adds that the increasingly fragmented legislative landscape may be set to “transition from inaction to dysfunction”, citing such factors as: Lawmakers return in Sept. with no clear strategy GOP leaders will likely be forced to rely on sizable contingents of Democrats Current spending caps for FY2018 are “despised” by both Democrats, Republicans, but for wholly different reasons White House’s position remains unclear as Treasury Sec.
With the Republicans in control of both chambers of Congress and the Presidency, this would prove the complete incompetence and inability of the Republicans to govern. They would deserve to cease as a party if this happens.