Fixed income, rates & currency: US debt crisis averted – what next?
By Caroline HayJuly/August 2023 (Magazine)
The US debt ceiling crisis was resolved in June, avoiding potentially major fireworks, with a suspension of the limit until early 2025. This ensures that the next time the politicians have to fight about it will be after the November 2024 presidential election. Although markets were relieved at the temporary resolution, the process of rebuilding the very depleted Treasury cash balances – with some huge bill auctions planned – will drain significant liquidity from the system, which could put pressure on the rates market.