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The U.S. Debt Ceiling Debate

  • ,  Senior Investment Writer |
  • 19 May 2023
  • Updated 26 May 2023

US debt ceiling

Between Economic Reality and Political Tensions

As debate continues to mount around the U.S. debt ceiling, investors are paying close attention to the conflict between politics and economics. The debt ceiling should act to keep the U.S. government’s spending in check. As the U.S. dollar is a global reserve currency, the finances of the U.S. government are in a sense the finances of the international financial system. That is why the U.S. debt ceiling crisis matters for investors across the globe.

Does the Debt Ceiling Do More Harm than Good? (Chicago Booth Review)

The U.S. Treasury Department takes “extraordinary measures” to avoid running out of money, but political tensions continue to make raising the ceiling a fraught process.

US Debt Ceiling In Focus – May 2023 (Invesco)

For compliance reasons, this paper is only accessible in the United States

If the debt ceiling debate is not resolved, the Treasury could avoid default by continuing to pay interest on Treasury securities as they become due by delaying other payments.

Debt Ceiling Showdown: Should Investors Worry? (Capital Group)

For compliance reasons, this paper is only accessible in the UK & Europe

The chances of a technical default — which would occur should a bond payment be missed or even delayed — are very low but not zero.

Falling Off The Debt Ceiling (Qontigo)

According to Treasury Secretary Janet Yellen, the US government will run out of money to pay its bills as soon as 1st June. Should investors worry about it?

Debt Ceiling Debate: Examining Risks Around The X Date (PIMCO)

For compliance reasons, this paper is only accessible in the UK & Europe

It is probable that in the event of a technical default, the Federal Reserve may try to step in, buying in-default T-bills and swapping good collateral for bad.

Podcast: Banking Crisis, Debt Ceiling, De-dollarization (Macro Voices)

Simplify Asset Management’s chief market strategist Mike Green discusses the ongoing crisis around the U.S. debt ceiling, as well as de-dollarisation and the banking sector.

US Debt Ceiling Back In Focus: The Context Matters (Wellington Management)

Debt held by the public is currently 98% of US GDP, which the Congressional Budget Office (CBO) projects will rise to 110% over the next decade.

The Debt Ceiling Dance (MFS)

For compliance reasons, this paper is only accessible in certain geographies

History shows that debt ceiling battles have generally been the most intense during times of divided government.