Treasury Secretary Janet Yellen fired off a warning shot to Congress right now, flagging a vital debt ceiling timeline that would rattle markets in early 2025.
Debt ceiling reinstates Jan 2Default danger window: Jan 14-23Treasury to deploy ‘extraordinary measures’ if wanted
The timing provides one other layer of complexity to an already heated political surroundings following the presidential inauguration. Markets have largely shrugged off earlier debt ceiling standoffs, however the compressed timeline might spark volatility.
“Extraordinary measures” – Treasury’s emergency toolkit – will kick in if Congress fails to behave, however these are momentary fixes, for maybe 4-6 weeks. The actual check will probably be whether or not the brand new Congress can navigate the political minefield round elevating the ceiling, particularly as Trump needs it eradicated.
It is going to be price watching how the brand new administration’s relationship with Congress impacts the pace of negotiations — we are going to see who’re the true fiscal hawks.
The market additionally assumes that Trump is not severe about bringing down the deficit, one thing this spherical of negotiations might reject or reinforce.
