Since the beginning of the conversation about the stimulus packages proposed by Joe Biden, it was realized that it would not be an expedited process, despite the Democrats having a majority in both houses of the US Congress. This is because the intention of the US President is always was to generate a consensus on this topic, not least because in some cases the simple majority of Democrats is insufficient, in addition to the fact that the Republicans made a point of informally aggregating the negotiations of stimulus packages to the debt ceiling theme, namely the package immediate $1 trillion, called infrastructure and with less opposition, plus the $3.5 trillion reconciliation budget, which will fund Biden’s ten-year strategy, but which has to overcome opposition from Republicans as they don’t accept that the amount is so high or that it is supported with more taxes.
But if the stimulus packages have time to be approved, the debt ceiling does not, since once this level is reached, the Treasury is no longer authorized to issue more debt, although it may use some expedients in the short term to meet the needs in order to comply with existing obligations, otherwise it would default. However, the impasse in the agreement to raise the debt ceiling, and thus create stability in investor sentiment, could create a period of greater volatility and caution on Wall Street, although the Senate will in principle vote in this direction on Monday. to extend government financing until the end of the year and raise the debt ceiling until the end of next year, an intention of the Democrats that should be opposed by the Republicans, who do not want the two issues to be combined.
Whatever the outcome and with the deadline for an agreement until Thursday, to avoid a partial shutdown, the next few days and maybe the next few weeks could be of greater tension in the US indices, as well as in the behaviour of the US dollar.
