Global Market – U.S. debt deal – suspends debt ceiling till 1-Jan-25
This week we will discuss the U.S. debt deal details as it suspends debt ceiling limit till next U.S. presidential election, but it comes with certain curbs on spending and restriction. Prime facie deal looks well balance – we do believe it another round of monitory expansion.
U.S. debt deal details
• Deal would suspend the $31.4 trillion debt ceiling until Jan. 1, 2025, allowing the U.S. government to pay its bills.
• Non-defense discretionary spending would be “roughly flat” at current year levels in 2024, “when factoring in agreed upon appropriations adjustments,” according to White House officials.
Relief for U.S. Presidential election 2024
• The debt limit extension lasts past 2024, meaning Congress would not need to address the deeply polarizing issue again until after the November 2024 presidential election.
• Still, tough conversations about how to allocate money under the new spending caps will need to take place in Congress this year.
Biden and McCarthy agreed to claw back much of the unused COVID relief funds as part of the budget deal. The estimated amount of unused funds is between $50 billion and $70 billion.
Equichain Wealth Advisors: Market View & Opinion
We expect current U.S. deal could have very limited impact in near term, we see this as yet another round of monitory expansion in a gradual manner. Incoming U.S. economic data would be very important in near term ahead of US Fed meeting on 14-Jun-23.
We see current U.S. debt deal & likely pause by US Fed on 14-Jun-23 would have huge positive impact of risk-on sentiment and big rally is not ruled out. Another hike of 25-bps by US Fed could change the matrix and probability of rally or change in risk-on sentiment. So now US Fed meeting on 14-Jun-23 becomes a very important event for global market.