USDebtCeilingCrisis.ComLet’s make some noise for the 11th hour party people. Bipartisan talks between US President Biden and House Republicans over the debt ceiling crisis have finally come to a resolution. Well, in theory at least since there is the small matter of Congress having to vote on it later this week. US lawmakers might balk at the idea that this is an 11th hour deal since the much touted ‘hard deadline’ of the 1st of June has now moved to the 5th of June. Any chances we could see that pushed forward by a few more days in the event of further brinkmanship during the Congressional vote on the deal?
Make no mistake. Regardless of the real hard deadline before the US technically defaults on its public debt, this will have been an 11th hour deal. The thing with 11th hour deals whether they’re related to business, divorce settlements, ransom/hostage negotiations or drug deals is that they tend to be equally bad for both parties but at least everyone walks away equally disappointed. A deal as critical as the one needed to tackle the debt ceiling crisis should have been done and dusted well before this game of chicken ended in both parties swerving just before the head on collision.
The US debt ceiling issue is a bubble. The limit has been lifted 78 times since 1960 and is quite the magician’s trick. Raising the limit each time a ceiling is reached and then kicking the issue into the long grass until the next time negotiations need to take place is dangerous enough but the way in which this current deal has been tentatively reached has created micro tears in this bubble and only time will tell if the bubble bursts at some point in the not- too-distant future. Even a smooth run through Congress later this week will be short-term relief for markets as the possibility of a crash depends on the extent of any liquidity leaving the system and where exactly that liquidity drain comes from as soon as the US Treasury turns on the T-bill tap to full blast after a confirmed deal.
These are exciting times for FX traders as we trade the bull runs, the bear runs and the crashes. Keep yourself educated and informed at all times. And remember that whenever you go to the market, be careful out there.
BluetonaFX
