The US debt ceiling is in focus as the Congress decides how to tackle the national debt. The US hit the $31.7 trillion dollar debt limit in January and has been relying on “extraordinary measures’ to meet existing obligations. These measures allow funding to tread water until cash reserves run out on June 1st. Over the next few weeks, we anticipate the topic will be covered in news outlets and wanted to share our thoughts along with perspective from our partners at BlackRock.
Summary Points:
- Debt limit of $31.7 trillion dollars requires action by Congress to either extend or increase the current limit.
- Congress has raised the debt limit 78 times since 1960.
- Agreement is required between the House and Senate – currently under split party control.
- Existing debt obligations contain bi-partisan spending, concerning only items already approved in previous years.
- Raising the debt limit is not associated with additional spending through budgeted items in the future.
- Historically markets have reacted with volatility as debt ceiling conversations near the deadline.
- Fear leading up to the June 1st will drive the majority of volatility in markets.
For more – our partners at BlackRock have provided the attached commentary.
Best,
Garrett
Click Here for Article: BlackRock Commentary