US: Debt limit suspension expires tomorrow
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Suspension of the US debt limit expires tomorrow and we may enter a period with renewed fiscal uncertainty in the US. Estimates suggest the Treasury will run out of money in the autumn. We do not expect a solution before tomorrow and we could see infighting for some months.
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We do not expect a major impact on the US growth outlook in the short run from higher fiscal uncertainty but risks increase the longer it takes to reach a deal.
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The Fed is set to hike tomorrow but the next hike could be postponed if no deal is reached in coming months.
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The US Treasury's cash buffer at the Fed has declined but is set to be rebuilt when a solution is found leading to a tightening of USD liquidity.
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