Commentary
At the risk of sounding like a market curmudgeon, we must warn that the debt-ceiling deal agreement is a double-edged sword.
While the immediate financial risk of a U.S. government default has been averted, a few other consequences resulting from the debt ceiling increase will likely haunt investors and the U.S. economy in the next few months.
In other words, we should brace for some turmoil in the equity markets.
While the consensus view is that the Federal Reserve will pause its rate hike later this month, the end of the debt-ceiling drama effectively translates to the equivalent of a 25-basis-point hike….