With the U.S’s borrowing authority set to lapse on October 17th , the two main parties are still locked in a political stalemate and whilst “productive conversations have taken place” policymakers have still not reached a conclusive plan. Consequently, the 3-day advance U.S headline stock indices enjoyed on the back of Boehner’s comments last Wednesday has ended. Last week Boehner made clear that the Republicans were considering signing on to a short-term increase in the government’s borrowing authority to buy time for negotiations on broader policy measures.
Whilst Friday’s optimism that a deal might be forged over the weekend vanished, Senate Majority Leader Harry Reid and Republican leader Mitch McConnell held talks that Reid labelled “substantive”. However, whatever deal the Senate might reach will still have to return for approval by the House, where the Republican majority faces strong not to make concessions to President Barack Obama. Both the Senate and House are scheduled to be in session on Monday, even though it is the Columbus Day federal holiday.
Head of the IMF Christine Lagarde has warned of the “massive disruption” that could be caused to the global economy if the U.S debt ceiling was not lifted by Thursday. But on a brighter note, the euro zone enjoyed better than expected growth in August with its most significant expansion in more than 2 years. Whilst The 9.5 trillion euro economy is awakening from an 18-month-long economic downturn, the recovery is tempered somewhat as countries suffer from record unemployment rates and the impact of austerity on their economies.