Treasury Secretary Janet Yellen fired off a warning shot to Congress as we speak, flagging a crucial debt ceiling timeline that would rattle markets in early 2025.
- Debt ceiling reinstates Jan 2
- Default threat window: Jan 14-23
- Treasury to deploy ‘extraordinary measures’ if wanted
The timing provides one other layer of complexity to an already heated political setting following the presidential inauguration. Markets have largely shrugged off earlier debt ceiling standoffs, however the compressed timeline might spark volatility.
“Extraordinary measures” – Treasury’s emergency toolkit – will kick in if Congress fails to behave, however these are non permanent fixes, for maybe 4-6 weeks. The actual take a look at will likely be whether or not the brand new Congress can navigate the political minefield round elevating the ceiling, particularly as Trump desires it eradicated.
It is going to be price watching how the brand new administration’s relationship with Congress impacts the velocity of negotiations — we are going to see who’re the actual fiscal hawks.
The market additionally assumes that Trump is not critical about bringing down the deficit, one thing this spherical of negotiations might reject or reinforce.
