US debt limit: Scare me again? – BNPP

The CBO estimates the US Treasury will run out of cash in mid-October, while Treasury Secretary Mnuchin says 29 September but either way, the debt-limit clock is ticking, according to Bricklin Dwyer, Senior Economist at BNP Paribas. 

Key Quotes

“Fed transcripts from 2011 reveal a plan to prioritise principal and interest on Treasuries in the event of a debt-limit breach; this increases the risk of a misstep.”

“After yet another failed Obamacare repeal vote, President Trump appears unwilling to give up the healthcare fight ahead of a full fiscal agenda for the remainder of 2017.”

“We think Congress will lift the debt limit again, likely via an extension to a bill with bipartisan support.”