US deadlock: Solution or disaster ahead?
In what can at best be described as a “fluid” situation, the meeting between Obama and house Republicans failed to produce specific results overnight sending the futures market initially lower, but as the details of the meeting emerged US stock futures rebounded. Did the policy makers manage to solve the problem? Clearly not. What happened then? It is practically the confidence in a down-to-the-wire agreement that sent the S&p500 to its biggest single day rally since January. With the US government shut down for over 10 days now and no agreement on extending the government’s borrowing authority beyond the October 17 deadline we are pretty much at a critical point. And the million dollar question is whether we will end up with a resolution or a disaster. A solution would restore confidence in the markets and push equities and the USD higher. So how likely is that scenario? I personally think that it is not uncommon for lawmakers to create a crisis so that they can then save the world from it. Having said that, I will be eyeing the 1730 area for the S&p500 and the 1.36 for the EURUSD. Have a nice day.
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