Markets Are Up And The Debt Ceiling Is Hours Away

Markets are up slightly in Europe.

Britain’s FTSE is down 0.2%.

France’s CAC 40 is is down 0.5%.

Germany’s DAX is flat.

Italy’s FTSE MIB is is up 0.5%

Spain’s IBEX is flat.

Japan’s Nikkei closed up 0.1%.

Meanwhile U.S. futures are pointing modestly higher with Dow futures up by over 50 points.

All of this comes after Fitch’s downgrade of the U.S. credit outlook as the October 17 debt ceiling nears.

On Tuesday night, Congress scrambled to cobble together a workable deal to delay the debt ceiling and reopen the government. At this point, it seems that an agreement is within reach.

Even if we miss the October 17 debt ceiling, it won’t be the end of the world.

Many economists have repeatedly warned that any default would come at the end of the month at the earliest.

To clarify, the debt ceiling is when the U.S. Treasury will no longer have the authority to borrow money by issuing bonds. However, it will still have around $US30 billion in cash to continue financing its obligation. It’s only after that cash runs out that we have to start worrying.

This understanding may explain why the markets continue to be so calm.

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