Eyes turning to the US debt ceiling as a major risk - Westpac

Analysts at Westpac explained that Washington dysfunction will be on show once again in Sep and Oct when two separate albeit inter-related issues converge – a need to raise the ever contentious US debt ceiling as well as pass a resolution to fund government operations and avert a shutdown from Oct 1.

Key Quotes:

"A unified government could have been expected to substantially remove risks around a shutdown and the debt ceiling. But, the key players are even more polarised than usual, as the recent legislative failure around healthcare reform shows, and the current Administration has shown a disregard for sticking to established norms."

"The window is uncomfortably tight too - the House is in its August recess and will sit for just 12 days in September where it must address both issues."

"All told that guarantees an even more acrimonious debate than usual that will surely go right down the wire. The debt ceiling should eventually be raised, averting a technical default, but our confidence levels are lower than similar episodes in 2011 and 2013."