first_imgSeptember 29, 2017, a day that will live in infamy? Probably not, but maybe. September 29 is the date when the U.S. federal government debt ceiling must be raised above $19.8 trillion or the government has to start prioritizing their expenditures and potentially begin to shut down. This nearly happened in 2011, and S&P actually downgraded its rating on our sovereign debt.The government actually did shut down for two weeks in October 2013, but that was over a funds appropriation battle between the White House and Congress, where both sides failed to pass a funds authorization measure for 2014. However, that fight did not imperil our sovereign debt’s pristine S&P rating. Personally, I get dizzy when I try to understand just how our legislative and executive branches make the proverbial sausage that funds our federal government, and like it has been said more than once, nobody likes to see how the sausage is made. The fear in the financial markets is that the failure to raise the debt ceiling for a prolonged period of time can raise short-term interest rates substantially, which in turn could hurt the economy. The Federal Reserve is watching the unfolding events closely.Fear over the debt ceiling began when President Trump, in a speech this past Wednesday, threatened to shut down the government if funds are not appropriated for his planned wall on the U.S./Mexico border. In other words, he may not sign the bill to lift the debt ceiling if he doesn’t get the funds. This put a bit of a shock to the markets, particularly the Treasury bill market, where bills maturing immediately after September 29 spiked between 4-5 basis points following the President’s remarks. continue reading » 7SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblrlast_img

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