Thread: Government shutdown, debt ceiling looming...

The futures aren't really reacting to that yet. They'll probably agree on some kind of short extension of 2 -3 weeks. Then they will get a ton of revenue inflows from corporate quarterly payments due on the 15th to keep funding the gov. Coming to the wire, but I doubt there's a default in the cards, especially next week. Maybe more downgrades in the interim, though?

I'm just tired of our Congressmen and Senators always taking either the debt ceiling or next year's budget right down to the wire. Start doing your d..n job like you are supposed to and stop playing party brinkmanship over the lives of your constitutes.

Also why are we only one of two counties that have a debt ceiling law????? Get rid of the stupid thing.

Originally Posted by tsptalk

The futures aren't really reacting to that yet. They'll probably agree on some kind of short extension of 2 -3 weeks. Then they will get a ton of revenue inflows from corporate quarterly payments due on the 15th to keep funding the gov. Coming to the wire, but I doubt there's a default in the cards, especially next week. Maybe more downgrades in the interim, though?

This is different- it’s not a budget appropriations battle- they have the money approved by Congress. It’s a debt ceiling battle, which means they will only be able to do a big extension, like raise it 3 trillion, or something. A 3 week deal really can’t be done because they don’t know how much 3 weeks would cost. They aren’t even sure today that they will hit the ceiling June 1. It’s close, but how much is in the G fund actually matters. If everybody moved to G, I wonder if that would give them another week. Or just a day.

. 14th amendment would keep it going, but then the Court would have to weigh in.

I’m afraid they are going to blow it up this time and it’s just not going to get done in time. Keep your fingers crossed that stocks don’t buckle.


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Originally Posted by James48843

I’m afraid they are going to blow it up this time and it’s just not going to get done in time. Keep your fingers crossed that stocks don’t buckle.

It sure got scary in 2011 during the negotiations...

I think the government needs to live within its means. There is a lot of waste and multiple layers of unnecessary bureaucracy. The more money you feed it, the more the federal government spends & expands. Continuing to print more dollars isn't the solution and with the real possibility that the US is losing its reserve currency status, I think we may be in for more hurt in the future by not controlling the debt.

I agree that there should probably be some adjustments, increasing or removing the limit on SS Payroll tax would be one way to increase revenues quickly. High income earners (over $200K)
are already paying an additional .9% medicare tax

They should be sequestered until they come to a solution.

Originally Posted by James48843

Ok- The House just adjourned for the weekend.

There is NO DEBT CEILING DEAL, and now no way to even schedule a vote on any deal until next week.

That means it just got far, far more likely that there will be a US default. Here is what the Hill has to say about Congress leaving town.

https://thehill.com/homenews/house/4...bt-limit-deal?

I think stocks will reflect that failure to reach a deal - and fall from here out , until things get settled.

I’m sitting in G and gonna stay there.

Originally Posted by nasa1974

I'm just tired of our Congressmen and Senators always taking either the debt ceiling or next year's budget right down to the wire. Start doing your d..n job like you are supposed to and stop playing party brinkmanship over the lives of your constitutes.

Good article on what exactly happens to government bond holders if the U.S. defaults.

Explainer: What would happen to a Treasury bill after default? Six key questions


May 25 (Reuters) - The U.S. Treasury Department is at risk of defaulting on its debt if Congress doesn't act to lift the debt ceiling before it is reached, which could happen as soon as June 1. For holders of Treasury bills, notes and bonds, that raises uncertainty over whether the issues they hold will be affected, and what happens if the debt is not repaid or an interest payment is skipped.

DO ALL BONDS DEFAULT IF ONE PAYMENT IS SKIPPED?

No. Treasuries do not have any cross default provisions so a skipped payment on one issue will not necessarily impact others.

So far, moves in the Treasury bill market reflect localized concern over certain issues that mature in early June, when the U.S. Treasury Department is viewed as most likely to run out of funds. Yields on these bills are trading at higher levels than comparable debt that matures later in the year.

WILL DEFAULTED ISSUES STOP TRADING?

Analysts say it is critical that Treasuries can continue to be transferred on the Federal Reserve’s settlement system, the Fedwire Securities Service. The Treasury can ensure the securities remain on Fedwire by giving notice the day before that a payment will be delayed. It should do this daily until it can make the payment.

More:

https://www.reuters.com/markets/us/w...ns-2023-05-25/


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Debt ceiling negotiators close to a deal, with IRS funding in the spotlight

The White House and congressional negotiators were closing in on a compromise agreement to raise the debt ceiling for two years.

House Republicans are on track to win on some top priorities, including rescinding some of the $80 billion allocated for the IRS by last year’s Inflation Reduction Act.

https://www.cnbc.com/2023/05/26/debt...elopments.html

Tax inflows help push the deadline out a few days...

Treasury says it won’t run out money until at least June 5, buying time for debt ceiling talks

WASHINGTON — Treasury Secretary Janet Yellen said Friday that the United States will likely have enough reserves to push off a potential debt default until June 5.

“We now estimate that Treasury will have insufficient resources to satisfy the government’s obligations if Congress has not raised or suspended the debt limit by June 5,” Yellen wrote in a letter to House Speaker Kevin McCarthy.

https://www.cnbc.com/2023/05/26/trea...ing-talks.html

Well, June 5th is getting closer and closer.

I’m seeing a lot of pushback today from both R’s and D’s on the deal. I do not know if there will be enough votes in the House to pass- at least 23 R’s in the House have passed objected, and there are a number of D’S in the Senate objecting to the Manchin gas pipeline in portion.

We should know by Thursday or Friday whether it will get a passing vote. They will need 60 on the Senate- and I don’t know if they will have that.

I’m still taking a wait and see approach.

Any ideas out there on what will happen to stocks if it passes? And what if it fails? Will we get to June 5th without a law signed? If so, what will the effect be on stocks? Bonds?

Your thoughts? .




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Originally Posted by James48843

Any ideas out there on what will happen to stocks if it passes? And what if it fails? Will we get to June 5th without a law signed? If so, what will the effect be on stocks? Bonds?

Your thoughts? .

My guess is that the market has "mostly" priced in a deal, meaning there is more risk is on the downside if no deal is made. A signed deal will likely trigger a modest rally, but with the Fed's FOMC meeting on deck in a couple of weeks, it will quickly be business as usual. The Jobs Report Friday will be important as the Fed contemplates pausing at the June meeting. The market is currently pricing in a 60% chance of a 0.25% hike.