US debt celiing debacle and mixed messages weigh on Wall Street

3 weeks ago 9

The US Senate Chuck Schumer has stated that they are seeking to bring the debt limit bill to a vote on Tuesday that could pass without Republican votes.

He says a move on the debt limit would require all 50 Republicans to give permission and not filibuster.

In other words, the Democrats expect the Republican party to allow a simple majority debt ceiling vote. 

''We will have a government funding bill ‘very soon’''.

Wall Street is on edge

Meanwhile, there are conflicting messages which the markets are not enjoying on the day. The S&P 500 and the Nasdaq headed for their worst day in four months. At 17.48 GMT, the Dow Jones Industrial Average was down 544 points, or 1.57%. The S&P 500 was down 86.40 points or 1.94% and the Nasdaq Composite was down 403 points, or 2.65%.

For instance, the Senate Democratic Whip Dick Durbin says raising the debt ceiling via budget reconciliation is a “non-starter” that simply takes too long. Across the Capitol, his House counterpart Steny Hoyer put it differently: “Reconciliation is one option and that’s on the table.” This was from Politico earlier on Tuesday. 

''Those mixed messages underscore the confusion among congressional Democrats about how the majority party and its slim majorities will avoid a potential default just three weeks away. Senate Republicans sank Democrats' plan to fund the government into December and kick the debt limit through the 2022 midterms, and now they are about to block an effort from Senate Majority Leader Chuck Schumer to lift the debt ceiling by a majority vote on Tuesday.''

Besides that, we have major institutions speaking up about the risks of this debacle. Earlier in the day, JP Morgan Chase  CEO Jamie Dimon said his bank has already begun preparing for potential US credit default as debt limit talks go to wire,

''Failure to address US debt limits in time would be ''potentially catastrophic,'' he told Reuters. 

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