FRANKFURT — Investors outside the United States expect politicians in Washington to solve their partisan wrangling over whether to raise the government’s debt ceiling, though longer-term worries remain about when the world’s largest economy will reduce its borrowing.
Democrats want to increase the debt ceiling, a move Republicans say is ill- conceived without a commitment to spending cuts.
Markets held their cool as traders saw through the political posturing. Prices for U.S. Treasurys barely budged early Wednesday. Bond traders and analysts say the idea that the dispute might somehow keep the U.S. from paying its obligations is highly unlikely.
The political debate will likely linger through the summer. The U.S. Treasury has said that unless the ceiling is raised by Aug. 2, the U.S. would be forced to default on at least some of its obligations.
Beyond the politics, however, longer-term worries about rising debt levels in the U.S. remain. A House vote Tuesday against raising the ceiling earned a chiding note from an official newspaper in China — the biggest foreign holder of U.S. Treasury debt, with about $1.14 trillion.
The Associated Press
