US: Take it to the debt limit – Rabobank

We are approaching another deadline for the adjustment of the US federal debt limit and the slim Republican majority offers senators an opportunity to make demands in exchange for a raise in the debt ceiling, according to analysts at Rabobank.

Key Quotes

“Congress only has a few weeks to raise the limit, increasing the risk of an accident. This risk is exacerbated by uncertainty surrounding actual tax revenues due to anticipated tax cuts.”

“Yields on treasuries due to mature around the estimated deadline have been rising already.”

“The debt ceiling may also affect the timing of the Fed’s announcement and implementation of balance sheet normalization and the next rate hike.”