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Debt Limit Deal Emerging in Washington?

Posted by Joseph Trevisani on Oct 10, 2013 12:00:00 PM

ScreenHunter 1903 Oct. 10 12.32

Bloomberg News is reporting that House Republican leaders are presenting a bill to their members that would increase the debt limit for six weeks without any conditions.

The proposal would  push the government's potential default back six weeks but would not end the partial shutdown of the Federal government and would prohibit the Treasury from using so called 'extraordinary measure' to extend the government's funding ability beyond the new deadline. A vote on the measure could come tomorrow or Saturday.

ABC news is reporting that the offer to extend the debt limit is contingent upon President Obama agreeing to negotiate on the terms for ending the partial government shutdown.

President Obama has said he would accept a short term increase in the debt limit without conditions and that after the limit is raised and the shutdown ends he would negotiate on budget items.

The equities and credit markets certainly believe the news, the Dow is up 232 points, and 1.57% as of posting and the yield on the generic 10-year Treasury is up five basis points to 2.72% today and 12 points since last Thursday.

Despite the political posturing and sometimes vicious rhetoric between the Democrats, Republicans and the President, it has always been very unlikely that any of the parties involved would push the policy conflict to the brink where it could threaten even a partial or technical default.

See our post of last Friday on this topic: http://blog.worldwidemarkets.com/bid/340190/Stocks-Gain-Currencies-Calm-with-Debt-Limit-Optimism

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets Online Trading

 

 

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