Debt Ceiling Tracker: Stalemate

Key Developments

• On 18 May, the House Freedom Caucus (about 40-50 GOP lawmakers) publicly committed to making no concessions on the debt ceiling bill voted in April. 
• The White House and Treasury have withdrawn from possibly using the 14^th Amendment to the Constitution to issue debt above the limit and from demanding an unconditional increase in the ceiling. It is unclear what their new negotiating strategy is.
• After a WSJ opinion column suggested running down the Social Security Trust Fund to pay social security benefits, some Republicans have been accusing Secretary Yellen of exaggerating the risks of crossing the X-date.
• Republican negotiators still see both sides as far from a deal.
• No more meetings are currently planned between the two sides.
• On 22 May, Secretary Yellen sent a further letter to senior Congressional leaders reiterating that the X-date was likely in early June and potentially as early as 1 June.
• I continue to expect the X-date to be reached without a deal.

Dominique Dwor-Frecaut is a macro strategist based in Southern California. She has worked on EM and DMs at hedge funds, on the sell side, the NY Fed, the IMF, and the World Bank. She joined Macro Hive soon after its inception.

Mustafa Chowdhury comes with over 30 years of experience in the industry. He has held senior positions at several leading firms, including Voya Investments (formerly ING US), Deutsche Bank, Bear Stearns and Freddie Mac. He has a wealth of knowledge and expertise in trading, research, and portfolio management of G-10 Macro Rates, MBS and Derivatives.

Photo Credit: depositphotos.com

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)

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