Nerves have been rattled across global markets owing to a lack of real headway in the US Congress deadlock.
Talks earlier this week between President Joe Biden and Republican House Speaker Kevin McCarthy were described as “productive” but the two sides have made little progress since, with Republicans demanding spending cuts but Democrats calling for a “clean” increase. The firm said the move “reflects increased political partisanship that is hindering reaching a resolution to raise or suspend the debt limit” before June 1, when the US Treasury Department warned the government will run out of money, triggering a default.
“However, we believe risks have risen that the debt limit will not be raised or suspended before the X-date and consequently that the government could begin to miss payments on some of its obligations.” Much of Asia followed suit Thursday with Hong Kong down more than one percent, while Shanghai, Sydney, Seoul, Singapore, Manila, and Jakarta were also in the red. Tokyo and Taipei edged up.
Minutes from the US central bank’s most recent policy meeting showed officials split on what to do at their June gathering, with inflation still more than double the two percent target.
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