Seven questions for investors on the US debt ceiling

What is it? US debt ceiling is a statutory limit imposed on the total debt the government is allowed to have

Seven questions for investors on the US debt ceiling

2. When is it due? The current debt ceiling was reached in January and the Treasury warned that it would run out of cash to meet its expenditure commitments around 1 June, although a precise date is impossible to predict.

3. What is the most likely outcome? We think there is a good chance that an agreement to raise the ceiling is reached soon. The debt ceiling has been raised multiple times in the past, but requires approval of both chambers of the Congress. Hence, this time both political parties need to come to an agreement.

4. What happens if an agreement is not reached by June 1st? In this case, the most likely outcome is that the government enters into debt prioritisation for a short period of time, paying debt servicing and debt principal payments before other expenditures. 

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