What's the Reaction after the Agreement of Debt Ceiling?
The stock market to surge after the White House and House Republicans reached a tentative deal to raise the debt ceiling? But markets may have other plans.
Buy on anticipation, sell on fact?
If markets get what they ultimately want — no debt default — they’ll have to buckle up for a potentially rough ride immediately after a deal is signed.
• Immediate market impact of a debt ceiling deal:
That’s because the Treasury will instantly need to replenish the cash it burned through during the period of extraordinary measures when it could not borrow more money.
This will create more competition for equity from investors. After weighing their options, many investors may find the returns from investing in US Treasuries better than stocks. That will temporarily suck some liquidity out of the stock market.
• Long-term effect of debt:
More debt creates inflation, which becomes a yearly vicious cycle that the US and the world are facing.
In a recent article, we connected the dots to help explain the factors contributing to the current high interest rate environment and bank runs, and provided insights into the risks and opportunities that lie ahead.
$S&P 500(.SPX)$ $NASDAQ 100 Volatility(VXN)$
Don't expect the stock markets to rejoice about the debt ceiling deal | CNN Business
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