US: Debt limit suspension expires tomorrow

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.
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.
The Fed is set to hike tomorrow but the next hike could be postponed if no deal is reached in coming months.
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.

Danske Research Team Danske Bank A/S

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Danske Research Team

Danske Bank A/S

Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.

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