Wall Street stirs as debt ceiling brinksmanship mounts
What happens when the thing that’s supposed to be the safest investment in the world is no longer a sure thing
NEW YORK (AP) — The first alarm bells are starting to go off on Wall Street as brinkmanship over raising the U.S. government's $31.4 trillion debt limit raises worries in financial markets.
The stakes are immense. Democrats and Republicans are arguing over whether to raise the cap that's been set for the U.S. government's borrowing. It's a debate that's happened many times before, each time ending with a default-defying increase.
Failure to find a fix would spell disaster for many, not least holders of U.S. debt who wouldn't get promised payments on time. Economists widely expect a recession to follow and potential chaos in markets. U.S. Treasurys are the foundation of financial markets around the world, on top of which all kinds of other investments set their prices, from stocks to foreign currencies.
While U.S. stocks have remained mostly calm through the latest debt-ceiling drama, volatility strategists at Barclays Capital point to another corner of the market where fear is popping up: short-term Treasury yields.
