Insurance against US bonds shot its highest.

The recent political deadlock in Washington over the debt ceiling has caused an increase in the cost of credit default swaps for the United States. This is due to fears that the government may not be able to meet its financial obligations, which would result in a default on its debt. Credit default swaps are insurance policies against such defaults. As the likelihood of a default increases, so does the cost of these swaps.

The impasse has also raised concerns about the US economy's stability and its reputation as a haven for investors. If the government were to default on its debt, it could have significant ripple effects throughout global financial markets.

Many experts are calling for a resolution to this issue to avoid further damage to the US economy and its standing worldwide. However, with both sides seemingly unwilling to compromise, it remains to be seen how this situation will ultimately be resolved.

In addition to the impact on credit default swaps, the political deadlock has also caused uncertainty in other financial markets. For example, investors are becoming increasingly cautious about buying US Treasury bonds, considered some of the safest investments in the world. A default on US debt would mean the government would no longer guarantee these bonds.

Furthermore, the uncertainty surrounding the debt ceiling has also affected the stock market. The Dow Jones Industrial Average and other major indices have shown increased volatility recently as investors react to news about the political impasse. As a result, some companies are delaying investments or hiring until more clarity on resolving this situation.

www.sba.tax

Comments

Cloud Bookkeeping

US FED rate rise.

The US Federal Reserve officials have indicated that they plan to resume increasing interest rates to control inflation in the world's biggest economy. During the June meeting, the Federal Open Market Committee reached a consensus to keep interest rates stable for the time being to evaluate whether further tightening of policy would be necessary. However, the majority of the committee anticipates that additional rate increases will be required in the future. The minutes of the meeting have recently been made public. According to the minutes, most participants believed maintaining the federal funds rate at 5 to 5.25 per cent was appropriate or acceptable, despite some individuals wanting to raise the acceleration due to slow progress in cooling inflation. Although Fed forecasts predicted a mild recession starting later in the year, policymakers faced challenges in interpreting data that showed a tight job market and only slight improvements in inflation. Additionally, officials gr...

EU business slide.

S&P Global’s flash eurozone composite purchasing managers’ index, a key gauge of business conditions for the manufacturing and services sector, fell 1 point to 47.1, figures showed yesterday. That is its lowest level since November 2020 and the fourth consecutive month below the crucial 50 mark separating growth from contraction. One of the few bright spots in the survey was that companies in all sectors reported a slight easing of cost pressures, price growth and supply chain constraints. However, prices charged for goods and services still rose at the sixth fastest rate since such data started in 2002. Jobs growth increased marginally from October but remained low compared with the past 18 months. Following a few months of falling price pressure in manufacturing and services, the October print shows an overall stabilisation said Jens Eisenschmidt, chief European economist at Morgan Stanley. However, German businesses, at the hub of Europe’s energy crisis, reported that manu...

EU debt reduction

Brussels wants to give EU capitals extra time to curb their debts and create space for public investment as part of an overhaul of the EU’s deficit rules . The European Commission would table a proposal at the end of the month to reform the Stability and Growth Pact , under which it would work out multi-year , country-specific plans with capitals for getting their debt burdens under control , EU officials said . The proposals come as member states face mounting fiscal burdens as they spend hundreds of billions of euros sheltering businesses and households from the energy crisis . Under the new blueprint , the commission would propose a four- or five-year plan to an EU member state to get its public debt burden on a credible , downward trajectory , officials said . The national fiscal plan would need to pass a debt sustainability analysis and be approved by the commission and EU council . The new regime would ditch an EU ...

Search This Blog