12 key points to consider on the debt ceiling and the markets
How might different debt ceiling solutions aggravate or ameliorate the economic slowdown that is developing?
Austerity measures that flow from a debt-ceiling deal could contribute to the moderate recession the Wells Fargo Investment Institute expects this year, it said.
Even if Congress doesn’t cut spending as part of a debt ceiling deal, rising interest costs could pressure bond yields higher and push Congress into spending cuts or tax increases.
Beyond the direct economic impact of spending cuts and tax increases is the effect of higher interest rates on government spending, and on housing and other interest-sensitive economic sectors.