Flash: What next for US fiscal policy? – BBH

FXstreet.com (London) - Research teams at BBH noted that Republicans are beginning to look past the Affordable Care Act and the spending authority and debt ceiling issues have become linked.

Key Quotes:

“We think that the movement toward a short-term solution, that buys time for additional negotiation, is continuing. Despite the rhetoric, there appears to be more common ground than is widely appreciated”.

“While the Hong Kong Monetary Authority's decision to raise the haircut on US T-bills used for collateral is important, it is more a shot across the bow than a mortal injury. We do not think it portends a demise of the dollar as a reserve asset or anything like that. There remains no compelling alternative and the virtues of the dollar, such as a deep and liquid capital market, remains unaffected”.