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3 Oct 2013
Flash: Government shutdown; the day after - BAML
FXstreet.com (London) - Brian Smedley, Michael Hanson and Ian Gordon, strategists at Bank of America Merrill Lynch, now look ahead to what might be a messy debit-limit fight.
Key Quotes:
"The US government shutdown will likely be relatively short lived, but there is a risk that it could drag on for some time and complicate efforts to increase the debt limit in a timely fashion".
"The Treasury must secure a debt-limit increase before the end of the month, and the T-bill market has already begun to price in concerns about a late payment".
"The Treasury market has largely priced in a short-lived shutdown, but a messy debt-limit fight would represent a downside risk to rates. We would expect the USD to appreciate alongside the JPY and CHF in a debt-limit induced risk-off event".
Key Quotes:
"The US government shutdown will likely be relatively short lived, but there is a risk that it could drag on for some time and complicate efforts to increase the debt limit in a timely fashion".
"The Treasury must secure a debt-limit increase before the end of the month, and the T-bill market has already begun to price in concerns about a late payment".
"The Treasury market has largely priced in a short-lived shutdown, but a messy debt-limit fight would represent a downside risk to rates. We would expect the USD to appreciate alongside the JPY and CHF in a debt-limit induced risk-off event".