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Monday, August 1, 2011

Live Blog: The U.S. Debt Battle july 24, 2011

After weeks of partisan wrangling, President Obama and congressional leaders reached a deal Sunday night to raise the government’s debt ceiling, avoiding a government default but setting the stage for months more of stormy debates over how Washington taxes and spends. The Senate and House are expected to vote on the deal Monday. Follow developments in Washington and reaction globally here.
(Photo: Associated Press)


The White House and Republicans in Congress are scrambling to agree on a deal to raise the U.S. federal borrowing limit, with President Barack Obama warning in his starkest terms yet Monday that the U.S. is on the brink of a default that could trigger an economic upheaval. Follow developments in Washington and reaction globally here

  • Counting down to the opening of Asian markets, the U.S. Capitol is eerily quiet as Washington swelters through another blazingly hot day. House Speaker John Boehner is scheduled to hold a conference call with his fellow House Republicans at 4:30.  In the meantime, reporters and photographers are camped outside Mr. Boehner’s office in the Capitol, waiting for him to show up and give a sense of what’s going on. There don’t appear to be any bipartisan meetings in progress — at least none that are known to the media.



    • 2:37 pm
    • Strong Words From Across the Pond
    • by Naftali Bendavid
    • Add a Comment
    Not that anyone is mincing words in the U.S. on the debt debate, but a British cabinet secretary had harsh words for House Republicans today.
    Vince Cable, the British business secretary, told the BBC today, "The irony of the situation at the moment, with markets opening tomorrow morning, is that the biggest threat to the world financial system comes from a few right-wing nutters in the American Congress rather than the Eurozone."
    Cable is a member of the Liberal Democrats, which are in a coalition government with Prime Minister David Cameron’s Conservative Party.
    The contrary Republican view, put forward on Fox News today by GOP presidential hopeful Rep. Thaddeus McCotter (R., Mich.):  “The Democratic Party has been irresponsible throughout this process."


  • Heading into Monday trading, investors are unsure how to deal with a potential threat to what is supposed to be a risk-free investment in U.S. debt.
    “We’re stretching our brains over all sorts of things,” says David Hoffman at Brandywine Global, an affiliate of Legg Mason Inc. “I think it’s embarrassing. They’re idiots playing with fire. … Still, we think when you look at Japan, Europe, the U.S. is the best of a bad lot.”
    Some investors say they're banking on Treasurys holding up, or rallying, if Republicans and Democrats make a deal. Others are just unsure.
    “It’s a strange idea,” says Steve Horan head of professional education content  and private wealth for the CFA Institute. “There’s a notion out there that there’s such a thing as a risk-free asset. Practically, there’s never a risk-free asset for investors.”


    • 3:36 pm
    • White House Warns of Market Stress
    • by Damian Paletta and Carol E. Lee
    • Add a Comment

    White House chief of staff Bill Daley said the U.S. government's creditworthiness has already been damaged by the prolonged debate over how to raise the debt ceiling, with the Obama administration girding for volatility in global financial markets as soon as Sunday evening.
    "You've got markets around the world ready to react," Mr. Daley said Sunday morning on NBC's "Meet the Press." "It's time to get some certainty into the system."
    Mr. Daley, also speaking on CBS's "Face the Nation," predicted "a few stressful days coming up, and stressful for the markets of the world and the American people."
    (Photo: Associated Press)


    • 3:45 pm
    • Twitter Watches #debtpocalypse Unfold
    • by Joseph B. White
    • Add a Comment
    Following the debt ceiling issue on Twitter? Try #debt, #debt_ceiling, #debtpocalypse, #debtmageddon.
    There are other in use. One of the most popular is a string of tweets that express frustration with “Washington” under a hashtag that isn't printable here.


    • 3:46 pm
    • Boehner in the Building
    • by Joseph B. White
    • Add a Comment

    House Speaker John Boehner (R., Ohio) has arrived at the U.S. Capitol.
    (Photo: Associated Press)


    • 4:04 pm
    • Still Talking on the Phone
    • by Carol E. Lee
    • Add a Comment
    President Barack Obama and House Speaker John Boehner (R., Ohio) are still talking after all. The two men have spoken on the phone twice since congressional leaders gathered at the White House Saturday morning, a congressional official said.
    Messrs. Obama and Boehner spoke Saturday night and briefly on Sunday about the budget deal congressional leaders have been discussing, the official said.
    Negotiations shifted to Capitol Hill after talks between Messrs. Boehner and Obama broke down Friday night.  "As he said he would, the speaker has kept the lines of communication open with the bipartisan, bicameral leadership in Congress and the White House," Brendan Buck, a spokesman for Mr. Boehner said.
    An administration official would not confirm the phone calls, but said there are "a range of ongoing conversations at a range of levels" between the White House and Congress.


    • 4:23 pm
    • Reporters With 'Suspicious Minds'
    • by Naftali Bendavid
    • Add a Comment
    A spokesman for House Speaker John Boehner (R., Ohio) just emerged to announce to assembled reporters that Mr. Boehner is in his office preparing for his 4:30 p.m. conference call with GOP House members.
    The spokesman said reporters had been asking him whether everyone from Treasury Secretary Tim Geithner to Elvis Presley was huddling inside Mr. Boehner's office with him. But in fact, the spokesman said, the House speaker is simply preparing for the call.
    He didn't specifically deny that Elvis was in Mr. Boehner's office, though. Given the apparent state of the talks, maybe lawmakers could use his help.


    • 4:36 pm
    • Democratic Leaders Set Meeting
    • by Joseph B. White
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    Now there’s word that Senate Majority Leader Harry Reid (D., Nev.) and House Minority Leader Nancy Pelosi are "likely" to meet with President Obama at the White House at 6 p.m.


  • More details on the Democratic moves: The two top congressional Democrats -- Senate Majority Leader Harry Reid (D., Nev.) and House Minority Leader Nancy Pelosi (D., Calif.) -- are planning to return to the White House for a meeting at 6 p.m. with President Barack Obama, according to a source familiar with the talks.
    It's unclear what the Democrats-only meeting portends. But it's the first meeting of any kind involving the principals in Washington today, other than a conference call led by House Speaker John Boehner (R., Ohio) with GOP House members that is only now getting underway.
    The two parties are deadlocked on whether the debt ceiling should be raised in one or two increments before the end of next year.


    • 4:50 pm
    • What Will Boehner Tell GOP?
    • by Naftali Bendavid
    • Add a Comment
    A conference call for House Republicans, led by House Speaker John Boehner, is underway. Mr. Boehner had promised the call to update his members on the status of talks to raise the debt limit and cut the deficit.
    With few other developments today, much of official Washington has been waiting for the call to find out what Mr. Boehner says and to glean whether the chances of a bipartisan deal are improving. The White House and congressional Democrats are poised to respond to whatever Mr. Boehner says.
    The speaker is working to make sure Republican House members feel they’re being kept informed of the state of the negotiations. Some have complained in recent weeks that this hasn’t always been the case.
    In a similar conference call Saturday, Mr. Boehner told his members he was working toward a two-step package that would cut the deficit by $3 trillion to $4 trillion.
    The shape of next few days should be clearer once it emerges what Mr. Boehner told his fellow House Republicans. Stay tuned.


  • Here's one more sign that there’s no bipartisan approach to the debt limit in sight: Only the top two congressional Democrats are going to the White House tonight, as Dow Jones Newswires' Corey Boles reports. House Speaker John Boehner and other senior Republicans aren’t invited. However, one congressional officials says Mr. Boehner and President Barack Obama have spoken twice on the phone since early Saturday.


  • While House Speaker John Boehner confers with Republicans on a conference call, aides to Senate Majority Leader Harry Reid (D., Nev.) put out word he is working on a "back-up plan" to boost the debt ceiling by $2.5 trillion.
    Early reports on the latest Reid plan:  $2.5 trillion in spending cuts, no new taxes, the debt limit goes up $2.5 trillion.
    No word yet on the GOP plan Boehner is discussing on his conference call.


    • 5:04 pm
    • Dollar Drops as Asia Wakes
    • by Joseph B. White
    • Add a Comment

    Asia's starting to wake up. How’s that dollar doing? Looks like it’s trading down against the yen and the Swiss franc, but it's still early.
    Exchanges in Wellington, New Zealand will be opening soon. The big action starts in a few more hours when traders get to work in Tokyo and Hong Kong.
    (Photo: European Pressphoto Agency)


    • 5:27 pm
    • Boehner Sees No 'Grand Deal'
    • by Joseph B. White
    • Add a Comment
    Word from House Speaker John Boehner’s call with House Republicans is that he’ll have details Monday -– not today -- of a new proposal to cut spending and raise the debt ceiling, reflecting the principles of the "Cut, Cap and Balance" plan the House passed last week.
    Boehner also assured his members that there are no secret talks going on with the White House, according to participants on the call. Boehner told those on the call that a "grand deal" isn't possible with President Barack Obama.


    • 5:42 pm
    • More Details From GOP Conference Call
    • by Patrick O’Connor
    • Add a Comment
    House Speaker John Boehner warned House Republicans that avoiding a federal default will require some of them to make sacrifices, a participant in his conference call said. Mr. Boehner didn't specify what those sacrifices might entail, but he reminded his members that avoiding default requires a vehicle that can pass the Democratic Senate.
    House Majority Leader Eric Cantor indicated in his remarks during the conference call that Republicans don’t want to give President Barack Obama a debt-ceiling deal that lasts past the 2012 elections.  Mr. Cantor called the president's insistence on a deal that carries through the election purely political and indefensible.
    Mr. Boehner framed the situation this way: The president wants a $2.4 trillion debt-limit increase all at once with no guarantees of cutting an equal amount of spending.


    • 5:57 pm
    • No More 'Secret Talks'
    • by Patrick O’Connor
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    House Speaker John Boehner took pains during his conference call with fellow Republicans to assure them he's done with "secret negotiations" with President Barack Obama. Mr. Boehner told Republicans that the path forward is not an agreement between he and the president, according to a participant in the call.
    The speaker has taken heat from some fellow Republicans for negotiating with Mr. Obama over the debt issue, as he did earlier this year over a stopgap spending bill to avoid a government shutdown. Mr. Boehner is clearly trying to avoid more sniping from his back benchers, even as his office says he has "kept the lines of communication open" with the White House and Senate Democrats.


  • The euro could test $1.50 in what is expected to be a "scary" week in foreign-exchange markets, said Commonwealth Bank of Australia FX Strategist Joseph Capurso. "These guys are running out of time," Mr. Capurso said, adding that the dollar will be very weak to the benefit of the yen and the Swiss franc.


    • 6:12 pm
    • GOP Ready for 2012 Replay
    • by Joseph B. White
    • Add a Comment
    Today's events in Washington didn't do much to clear up how a U.S. debt default will be resolved, but they have illuminated a substantial obstacle to a deal. Republicans are ready, if not eager, to have a fight over the debt ceiling again before the November 2012 elections.
    The White House and Senate Democrats have said the debt issue needs to be settled until at least 2013.  House Republicans won’t roll out details of their latest proposal for avoiding a default until Monday, but during a conference call, House Majority Leader Eric Cantor made it clear he’s prepared to fight for another, pre-election showdown over debt and spending.
    Mr. Cantor called the president's position that any debt solution needs to carry through to 2013 purely political. Republican leaders are concerned Mr. Obama will use his microphone to turn public opinion against them on this point. They likely won't have to wait long.


    • 6:15 pm
    • Democratic Meeting Under Way
    • by Joseph B. White
    • Add a Comment

    Congressional Democratic leaders have started a meeting at the White House. The meeting was expected to include Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi -- but no Republicans.
    (Photo: Associated Press)


    • 6:17 pm
    • Looking Ahead to Monday
    • by Joseph B. White
    • Add a Comment
    Here's another item for Monday's debt-debate calendar: House Republican leaders will hold a meeting with the House GOP conference at 2 p.m. Monday, a Republican aide said.


    • 6:21 pm
    • Dollar Still Dropping as Asia Opens
    • by Stephen L. Bernard
    • Add a Comment
    The dollar fell broadly as Asian markets opened Monday and the apparent impasse in U.S. debt talks weighed on the greenback.
    Fears are rising that Congress will fail to meet a White House-imposed deadline of Aug. 2 to raise the debt ceiling, leading the U.S. to default on its debt shortly after that deadline. Even if a deal gets done, market participants are skittish that a long-term deficit-reduction plan might not be enough for the U.S. to avoid a ratings downgrade.
    The dollar fell to Y78.15 from about Y78.52 late Friday. The dollar also dropped against the Swiss franc, falling to CHF0.8120 from about CHF0.8182 on Friday.
    The euro was back above $1.44 to $1.4415 from about $1.4360 on Friday.


  • On Default Deadline Eve, there'll be some serious deflation in Washington.
    Perhaps the owners of the Washington Nationals know something no one else does -- or maybe they are just trying to sell more tickets in the dog days of summer. But on Aug. 1, one day before the U.S. government could begin running out of money to pay its bills, the baseball team is selling some tickets to the game against the Atlanta Braves for $1.
    If there's no deal to raise the debt ceiling by then, consider it a bad sign if there's a bunch of lawmakers in the cheap seats with their cellphones turned off.


  • No debt deal means good times for gold bugs. Gold prices are up sharply in early trading in Asia amid broader worries about risk as the debt-ceiling debate grinds on in the U.S.
    Gold for August delivery is up nearly 1% at $1,616.60 an ounce.


  • Though he didn't expect much of a reaction from the markets, Stephen Walsh, chief investment officer at Pasadena, Calif.'s Western Asset Management, decided to head into his office to watch the open of Asian trading.
    "The market has to be mildly disappointed," Mr. Walsh said of another weekend without significant progress on the approaching debt limit. "I still believe the market has been and will continue to price-in that in some way we're going to get an extension. [Although,] it might be insufficient to prevent a downgrade."


    • 7:12 pm
    • U.S. Stock Futures Fall
    • by Steve Goldstein
    • Add a Comment
    In thin electronic trade Sunday night, U.S. stock futures were down by nearly 1%. Dow Jones Industrial Average futures fell 114 points, or 0.9%, and S&P 500 futures also declined by 0.9%. Gold futures rose by $14.30 to $1,615.80 an ounce.
    On Friday, the Dow fell 43.25 points, or 0.3%, to 12681.16


  • The White House meeting with senior congressional Democrats ended at 7:04 p.m., lasting just over an hour.


    • 7:35 pm
    • Pimco's El-Erian Looks Ahead
    • by Mary Pilon
    • Add a Comment
    As the scramble for a deal came and went Sunday, Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., shifted his attention to what's coming next in what he described as "an increasingly remarkable and previously unthinkable situation."
    Here's what he wrote  in an email to The Wall Street Journal:
    First, in terms of interpretation: Rather than a grand bargain that helps lift some of the clouds that hang over the US economy, the political ground is being prepared for a short-term stop-gap compromise

    Second, in terms of market implications: Markets will now have to price in two factors: a larger uncertainty premium and an intensification of the headwinds facing US growth, employment and wealth creation. This is likely to translate into lower stocks and a weaker dollar

    Third, in terms of outlook: Over the next few days, Washington will likely get its act together to avoid a debt default but it will leave the AAA rating extremely exposed to a damaging downgrade


    • 7:53 pm
    • Democrats Oppose Short-Term Fix
    • by Carol E. Lee
    • Add a Comment
    No official statements are expected tonight from the White House on President Obama's meeting with Democratic congressional leaders, but a White House official said they agreed to oppose a short-term debt limit increase that would force another round of debt battles ahead of the 2012 election.
    "In the meeting the president received an update on the state of negotiations on the Hill from Leader Pelosi and Leader Reid, and the leaders and the president reiterated our opposition to a short-term debt limit increase," the official said in a written statement to reporters.


  • "I don't think anyone expects the default to actually occur, because why would you think that was possible? It just seems such a preposterous outcome," said Ashish Shah, head of global credit at AllianceBernstein. "It would seem ridiculous to default when creditors are more than happy to take your credit. But the risks of a downgrade are rising and that ultimately is going to raise the cost of funding for the country."


  • Japan's Nikkei Stock Average has opened down 0.5% at 10,080.82. More to follow shortly.


    • 8:08 pm
    • Short-Term Solution Emerges as Battleground
    • by Naftali Bendavid
    • Add a Comment
    In a conference call Sunday with Republican House members, House Majority Leader Eric Cantor (R., Va.) sharply criticized President Barack Obama for opposing a short-term debt increase, one that must be renewed next year instead of lasting through the end of 2012.
    "The president's position of forcing us to give him a debt limit increase through the election is purely political and indefensible," Mr. Cantor said, according to someone familiar with the call. "He cannot sustain or defend putting politics above the country's instance in this situation."
    Many Republicans have been arguing recently that Mr. Obama is simply trying to avoid having the debt limit issue come up again in the thick of his re-election campaign.
    But people familiar with the bipartisan talks led by Vice President Joseph Biden said that in those talks, Mr. Cantor repeatedly stressed that he himself would not support a short-term debt-ceiling increase.
    And Mr. Cantor also told reporters last month that he opposed a short-term increase. "I have said all along, as you know, that it is my preference that we do this thing one time, again, based on the notion that we have to make some tough decision," he said at the time. "Putting off tough decisions is not what people want in this town."
    Brad Dayspring, a spokesman for Mr. Cantor, said the House majority leader has always said that a long-term extension is the best path forward -- as long as it's accompanied by spending cuts at least as big as the debt-ceiling increase. A long-term increase would require raising the debt ceiling by about $2.4 trillion.
    More than two weeks ago, Mr. Dayspring added, in an attempt to find middle ground, Mr. Cantor told the president that they could avoid continual disagreement by passing a shorter-term increase of $1.5 trillion while cutting $1.7 in spending. Mr. Obama responded sharply and ended the meeting, he added.
    Mr. Obama and other Democrats argue that a short-term increase would prolong economic uncertainty, rattle the markets and ensure another bitter political battle when it expires in a few months. Republicans say a short-term increase makes sense if it's the only way to guarantee spending cuts that equal or exceed the size of the debt-ceiling hike.


  • Last week’s grand-bargain discussions between House Speaker John Boehner and President Barack Obama included a highly unusual feature, according to two people familiar with the situation: a ceiling on future federal revenues, in order to limit the size of any future tax increase.
    The Boehner-Obama deal fell apart, so the complicated arrangement isn’t going anywhere right now. But it could resurface in future negotiations over a tax overhaul and new revenues. That’s likely to be a recurring topic in deficit-plagued Washington.


  • Japan’s Nikkei Stock Average fell 0.6% to 10,069.58 as a stronger yen spurred profit-taking following the index's 2.5% gain over the past three sessions.
    "While concerns about Europe's sovereign debt issue have subsided for now, the U.S. debt talks are currently weighing on the market," says Hiroichi Nishi, general manager at SMBC Nikko Securities, pegging the index at 10,050-10,200 for the day.
    But analysts say shares should be supported at the 10,000 mark amid firm expectations for a slew of Japanese corporate earnings due this week.


  • The Kospi in South Korea is down 0.9% at 2151.48 in early trade after a sharp 1.2% gain Friday, as investors take a cautious approach with the development of the U.S. discussions on its debt-ceiling a key focus, analysts say. Foreigners appear undecided whether they'll net buy or sell local stocks after their recent selling streak. Financial stocks are leading declines.


    • 8:47 pm
    • Gold, Silver Up in Early Asia Trade
    • by Arpan Mukherjee
    • Add a Comment
    Gold rallied early in Asia as concerns deepened amid uncertainties over U.S. debt ceiling talks, making the yellow metal's safe-haven appeal more attractive. Spot gold touched a new high of $1,623.49/oz in the first hour of trading.
    While last week's pullback in gold prices was due to the finalization of a bailout package for Greece, Barclays Capital says concerns over U.S. debt persist as well as higher inflation expectations amid a low interest rate environment, setting a "fertile backdrop for gold prices," barring any temporary correction.
    Spot gold is at $1,612.70/oz, up $12.40 and silver is at $40.43/oz, up 36 cents from its previous close.


  • Australia's S&P/ASX 200 index is down 0.8%, with gold stocks outperforming after spot gold hit a fresh record high in early Asia trade. Resources, financials and industrials are all underperforming.
    New Zealand is off a tad by 0.3%.


    • 9:10 pm
    • Safe Haven Buying Spurs Yen
    • by Leslie Shaffer
    • Add a Comment
    Japanese exporters, including Sony, Sharp and Toyota, are all down around 1% as the yen strengthens against the dollar. The dollar is at 78.42 yen, from 78.56 yen late Friday in New York, while the euro is up against the dollar at $1.4379 from $1.4358.
    The Nikkei Stock Average is down 0.6%.


    • 9:15 pm
    • UBS: Real Debt Ceiling Deadline is Aug 8-10
    • by Martin Vaughan
    • Add a Comment
    As the clock ticks down on U.S. politicians trying to strike a deal to raise the debt ceiling, UBS Securities LLC says Aug. 2 may not be a real deadline. "UBS analysis suggests (the U.S.) Treasury has the funds to make all payments until about August 8th - 10th," Chris Ahrens, head of interest rate strategy says in a note. Ahrens writes that there is a "rising probability" of a downgrade of the rating on U.S. long-term sovereigns, a scenario that is possible even if the U.S. avoids default.


    • 9:30 pm
    • LME Base Metals Lower on U.S. Debt Worries
    • by Arpan Mukherjee
    • Add a Comment
    Base metals on the London Metal Exchange, widely used in manufacturing and construction and highly sensitive to economic indicators, are down in early Asia trading as investors cash out of risky assets.
    LME 3-month copper is at $9,664.75/ton, down $9.25 from its previous close. LME 3-month aluminum, zinc and nickel are also lower.


    • 9:56 pm
    • Singapore, China Markets Down
    • by Dow Jones Newswires
    • Add a Comment
    Singapore's benchmark Straits Times Index is down 0.9% tracking weak regional markets after last week's strong 3.2% rise.
    China shares are also lower, with the Shanghai Composite Index down 0.9% and the Shenzhen Composite Index 1% lower.



    • 9:59 pm
    • BofA-ML: AAA U.S. Credit Rating Likely Cut
    • by Isabella Steger
    • Add a Comment
    Bank of America-Merrill Lynch says in a note that the U.S. credit rating will likely be cut to AA by the end of the year. Even though the house believes a stopgap deal will come at the last minute, any follow-up deal is likely to be disappointing and will fail to provide a credible long-term fiscal solution or lift rating agency concerns.
    "A snap credit rating cut in August could occur upon a late or very disappointing stopgap deal, but it is more likely in several months when the follow-up deal disappoints. The former could have a more negative impact on stocks than the latter, as a delayed downgrade should give investors more time to digest the implications," it writes.


    • 10:02 pm
    • Gold Pares Early Gains on Profit Taking
    • by Clementine Wallop
    • Add a Comment
    Gold pares its gains as Asian traders take profits from the yellow metal's early rally to a fresh record high of $1,623.49/oz. Spot gold is at $1,611/oz, up $10.70 from its previous close but $12.49 off its record.


    • 10:11 pm
    • Hong Kong, Taiwan, Malaysia Down
    • by Dow Jones Newswires
    • Add a Comment
    Hong Kong's Hang Seng Index is off 0.7%, in line with regional markets.
    "The Chances of catastrophic consequences as a result of an event that there will be no compromise is quite low, although the uncertainty for now is keeping investors jittery," says Ben Kwong, COO of brokerage KGI Asia.
    The Taiex in Taipei is off 0.4%, and Malaysia's KLCI is a touch lower at 0.3%.


    • 10:14 pm
    • Nomura: Real USD Pain Would Be On Ratings Cut
    • by Andrew Monahan
    • Add a Comment

    Investors will remain hesitant on buying the greenback this week, but the real problems for the currency may come instead on any downgrades of the U.S. sovereign rating, says Hiroshi Maeba, a senior FX dealer at Nomura Securities. After recent comments from ratings agency S&P concerning the need for a longer term deficit reduction plan, Maeba says "the real trouble for the dollar would be if S&P or other agencies cut their ratings on U.S. debt." He says investors in Asia have remained relatively calm despite speculation of potential turbulence, amid statements from U.S. authorities that a technical default remains out of the question.


    • 11:24 pm
    • Asian CDS Widen
    • by Natasha Brereton-Fukui
    • Add a Comment
    Asian credit default swaps are slightly wider Monday, as investors refocus on the continued debt standoff in the U.S., following initial euphoria on the euro zone's Greek debt deal. With U.S. congressional leaders still split Sunday on how to cut the deficit and raise the debt ceiling, time is running out to cut a deal. Until that situation is resolved, it will hard for markets to find any coherent trend, an Asia-based trader says, describing credit markets as "a bit nervous." Spreads on the Markit iTraxx Asia ex-Japan CDS index were recently around 114-116 bps, wider than 111-112 bps at Friday's close in Asia.


    • 11:26 pm
    • BarCap: 11th Hour Deal Expected, Rating Downgrade Likely
    • by Martin Vaughan
    • Add a Comment
    Asian currency markets continue to reflect the expectation "that something will get cobbled together" in the U.S. to avoid defaulting on debt payments, says Adrian McGowan, head of FX trading, Asia Pacific at Barclays Capital. Markets have shown relative calm Monday despite warnings from U.S. politicians that the debt stand-off would shake them. "The market is also aware that operationally, the U.S. government likely has until about August 10" to strike a deal, McGowan adds, not the Aug. 2 date that U.S. officials have widely advertised. However, it looks increasingly unlikely that a last-minute deal will be sufficient to retain the U.S. AAA debt rating, he adds.


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