The US debt ceiling drama will drag on to August

The US debt ceiling is a ridiculous instrument that’s never accomplished anything except for selling newspapers. US President Biden has taken the stance that he won’t negotiate on anything about the debt ceiling because the US paying its debts isn’t negotiable.

That’s irked House Republicans because it’s previously been an opportunity for them to squeeze out some kind of concession from Democrats. Given the stance Biden took, House speaker Kevin McCarthy has decided to take some vague stances on negotiating that seem wholly-reasonable. The aim there is to throw it back at Biden and make him look like the one who is playing games with US government solvency.

I have absolutely no idea how it will end politicially but I’m utterly certain it will end with the US raising the debt ceiling. The only question is the timeline and Moody’s Mark Zandi estimated today that the government could use extraordinary measures to extend the deadline to mid-August. If that’s the case, then mid-August it will be.

There’s always a chance the market briefly freaks out about it like it did a few years ago but if that happens then fade it because it won’t last long. Otherwise, ignore the noise.