The next stop on the path to becoming law for the debt ceiling accord negotiated by House Speaker Kevin McCarthy and President Joe Biden is the Senate.
According to Roll Call, the measure has a good chance of passing the Senate by the weekend. However, the timeline is still being determined since one senator may block a fast-track procedure and force a prolonged discussion. A few senators are trying to add changes to send the measure back to the House for a vote.
The U.S. Treasury anticipates depleting its cash reserves on June 5. A default on U.S. debt, which may disrupt global financial markets and plunge the country into a catastrophic recession, would occur if Congress does not act to increase or extend the debt ceiling by August 2.
Democratic Senate Leader Chuck Schumer of New York said the measure would not be changed. He assured ABC News that the law would be moved as swiftly as possible. Simply put, we are unable to provide anything to the House. We have to keep from going into default.
Also emphasizing the need for swift action was Minority Leader Mitch McConnell (R-KY), who said on Wednesday that he hoped “we can finish this Thursday or Friday and soothe the country and soothe markets.”
On Thursday, Senate senators will have a clearer idea of where they stand, according to Minority Whip John Thune (R-SD).
The agreement holds the $31.4T debt ceiling for two years. Still, it also mandates that non-defense discretionary expenditure remain at FY2024 levels and grow by just 1% in FY2025. While progressives are against changes to the energy licensing process and greater job requirements for government food assistance programs, conservatives complain that the deal doesn’t go far enough in expenditure savings.
The Nasdaq gained 0.8%, the S&P +0.6%, and the Dow gained 0.3% despite the turmoil unfolding in Washington, DC. However, the 1-month Treasury note yield increased by 2 basis points to 5.18% after falling by 37 bps throughout the previous five sessions. Regarding yield, the US10Y dropped 3 basis points to 3.62%.
Featured Image: Freepik @ Mohd Azrin
Author Shariq Khan 
