Investors are increasingly worried about the looming debt ceiling fight in the U.S., which is set to take place this year. The debt ceiling, or “debt limit”, is a legal cap on how much money the federal government can borrow from investors and other lenders to finance its operations. If Congress does not raise or suspend the current limit of $22 trillion before it’s reached, then it will be unable to pay for essential services, such as Social Security payments and military salaries.
The last time there was a major debt-ceiling debate in 2011 resulted in an agreement that only raised taxes on households earning more than $450k per year and corporations making over $250k annually; however, this could be different now with President Trump pushing for tax cuts instead of increases during his 2016 campaign promises.
This has caused some concern among investors who fear that any failure by Congress to reach an agreement could lead markets into turmoil due to uncertainty around what would happen if the US defaults on its debts – something never seen before since WWII ended nearly 75 years ago! Investors have been warned by analysts at Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley, etc..to expect volatility ahead as they monitor developments closely while trying their best not to panic sell assets should things get worse than expected during negotiations between both parties involved (Democrats/Republicans).
Read more at Reuters