Christian Debt Recovery

Debt Limit Increases Under Obama

April 27th, 2009 |

Author: Gavin

debt limit increases under obama

US Debt Ceiling Deal

Financial markets are breathing a sigh of relief, as a compromise between the warring Republican and Democratic debt ceiling ideologies appears to have been reached. Dawn in Asia saw the dollar regaining ground against the Yen, followed by a weakening Swiss Franc. European markets have been rallying, the Stoxx Europe 600 Index rose 0.7% to 267.14 at 11:17am GMT and the FTSE 100 Index pushed upwards around 70 points this morning.

Last week, the raging debt ceiling debate triggered significant drops in the bond market, US treasuries and US stock portfolio. Markets were forced to witness the US tackling a deficit of $14.3 trillion as the default deadline beckoned. Volatility does not lie solely in the concept of a debt ceiling increase, with the limit extended on multiple occasions in US history. The inherent issue is the timeframe – cast by August 2nd and the ongoing issue of closet debt eating away at US growth supremacy.

The threat of a looming default now appears to have been removed as US assets experience a relief rally. Obama and congressional leaders came to an agreement late Sunday evening to avert default.

Details of the deal are still emerging but focus is on a ten year $2.2 trillion cut and still requires congressional approval. The agreement acts as a compromise offering no immediate tax increases, the Republican goal and no entitlement cuts the Democratic objective. Obama’s desire for a debt ceiling limit that will take the US beyond 2012 is also close to approval. The main fall out for this agreement comes in the shape of the Tea Party Republicans – a balanced budget amendment may still occur but is not mandatory.

The wider debate surrounding US debt and US confidence continues to tick away but for now the US has been dealt a well overdue economic reprieve, stepping back from the brink of an economic default of doomsday levels. A drop in the US GDP figures below forecasts of 1.8% to 1.3% does little to reassure markets in terms of economic growth.

Gold has emerged as a safe haven investment in light of dollar volatility and continues to take its place as a potential global currency for hedging and risk adverse strategies. Binary options enable traders to trade market volatility within a strictly limited risk environment.

The above information does not constitute as financial advice.

About the Author

Financial copywriter with an interest in binary trading