A Productive Debt Crisis Meeting But No Deal Yet
52% gain within 35 mins by taking calls and puts before price turns choppy. As expected, the on again, off again debt negotiations caused the price action to go directionless on the first trading day of the week.
With less than 10 days to go, both President and House Speaker are expected to iron out a resolution to benefit both parties and calm the market.
⚠️ Looking at calls above 420.38 and puts under 418.8 on Tuesday.
MACD crosses to enter trade
- President Joe Biden and House Speaker Kevin McCarthy met at the White House with just 10 days left to head off a potential debt default.
- Treasury Secretary Janet Yellen reaffirmed the June 1 date as the earliest that the U.S. could be at serious risk of debt default.
- Both Biden and McCarthy have acknowledged that a main sticking point in the talks remains the question of mandatory spending caps.
US President Joe Biden expressed optimism about reaching a deal to avert a default as he began a Monday evening meeting with House Speaker Kevin McCarthy on the debt limit.
The two sat down at the White House after Treasury Secretary Janet Yellen warned it’s now “highly likely” her department will run out of sufficient cash — and that a default could come as soon as June 1.
Deal or no deal?
What’s Holding Up The Talks?
A partisan stalemate is the issue. Republicans want the deal to raise the debt limit to include spending cuts. They’re pushing for other measures like adding new work requirements for Medicaid and applying existing work requirements to older individuals who receive food stamps.
President Joe Biden has thus far rejected work requirements on Medicaid. Negotiations also involve a retracement of unspent Covid-19 funds and a process for accelerating permits for energy projects.
Trade #1
What Happens If The US Defaults?
A default would mean that those owed money by the federal government won’t get it, at least not on time. Those parties include holders of Treasury securities, Social Security recipients, members of the military and Medicare providers.
Neglecting to pay bondholders in particular could result in credit rating companies downgrading Treasury debt. That in turn would result in higher borrowing costs for the government as well as everyday businesses and households, and would almost certainly lead to a recession.
And while an outright default is unlikely, getting too close to the debt ceiling could still have consequences. In 2011, S&P Global Ratings cut the US rating after a protracted debt limit debate, which hit markets and hurt consumer confidence.
In addition to higher borrowing costs for the government, that would also likely trickle down to consumers, with mortgage rates potentially rising to 8.4%, according to a report from the real estate firm Zillow.
Trade #2
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Modify on 2023-05-23 13:34
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If the meeting is successful, it could result in a plan that allows the debtors to repay their debts and avoid bankruptcy.
Only thing proved today is that politicians are all liars playing the game with their stupid constituents !
well if the meeting is unsuccessful, it could lead to further financial problems for the debtors.
The creditors may be reluctant to agree to a debt restructuring.