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Macroeconomic & Geopolitical

America (Probably) Won’t Default, Although It’s Not Yet Clear How

1 October 2021 - 3 min read

With Republicans having vowed not to vote to suspend the debt ceiling, it’s still not clear what legislative vehicle raising the debt ceiling will take, or when it may pass.

Markets so far are ignoring the risks around the debt ceiling showdown. If history is any guide, market perception of the associated risks may rise as we get closer to the deadline, when the Treasury runs out of extraordinary measures. While an accident is always possible, it’s highly unlikely lawmakers intentionally go down the path of default.

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