The Debt Ceiling Crisis for Dummies
Firstly, you’re not a dummy for not knowing what a debt ceiling is. Secondly, you’re in absolutely the best place to find out everything about it and how it may affect you. After our brief explainer, we’ll list the top fundamental events you can trade this week. Let’s get into it.
What is the Debt Ceiling Crisis and Why is it Happening?
The debt ceiling is the maximum amount of money that the government is allowed to borrow. The US’ current debt ceiling is set at a not-so-modest $31.4 trillion. That’s a lot of zeroes! The bad news is that the US government has already reached this limit, and it is running out of ways to pay its bills.
N.B. If you’re curious to see how bad things currently are, check out this real-time US debt clock and hide behind your sofa. If Congress fails to agree to raise this debt ceiling there will be a default on the national debt, which would have a crazy-bad impact on the economy.
How could this affect traders and investors?
You can probably guess the answer to this question. Anything that has a devastating impact on the US economy will cause problems for traders and investors.
A default on the national debt could lead to a stock market crash, a recession, and a gigantic loss of confidence. And it would impact individuals too. Economists have warned that the U.S. being unable to fulfil financial obligations would put millions of jobs at risk, increase unemployment and lead to higher prices for every day items.
Other repercussions of reaching the ceiling include a downgrade by credit rating agencies, increased borrowing costs for homeowners and a dropoff in consumer confidence that could tip the USA into recession (if it isn’t there already?)
Is there anything you can do?
This is a very real and imminent crisis and traders and investors should do everything they can to protect themselves and their assets. Here are a few tips.
● Reduce your exposure to risk. It’s recommended that you sell off any risky assets and look to invest in safe-havens, e.g. commodities like gold.
● Keep informed. Reading this article is a great start (well done, you!), but keep up to date with the latest developments so you can make better-informed trading decisions, fast.
● Be prepared for potential volatility. If this storm hits, the wider markets will take a very turbulent turn. Get ready for rapid price swings.
How are you feeling about this?
Do you think the US will default or will Congress agree a deal in the nick of time? How could this crisis impact you, personally? Let us know by tweeting us at @_contentworks!
Top fundamental events week commencing 12/06/23
Here’s everything you need to watch out for this week.
Monday, June 11
● GBP — 09:30 BST — UK manufacturing production (MoM)
● EUR — 10:00 BST — Eurozone industrial production (MoM)
Tuesday, June 12
● USD — 10:00 BST — US ADP employment change; 13:30 BST — US ISM manufacturing index
Wednesday, June 13
● EUR — 10:00 BST — Eurozone CPI (YoY); 10:00 BST — Eurozone core CPI (YoY)
● USD — 14:30 BST — US FOMC minutes
Thursday, June 14
● GBP — 09:30 BST — UK retail sales (MoM)
● USD — 14:30 BST — US weekly jobless claims
Friday, June 15
● USD — 13:30 BST — US non-farm payrolls; 14:30 BST — US unemployment rate
Here at Contentworks we closely follow market movements and prep content that we think your traders would love to read. Let’s get you started right here.
Speak soon!
The Contentworks team
