Wall Street Fears $1 Trillion Aftershock From Debt Deal
- Resolution would spur Treasury to replenish coffers via bills
- Move could drain liquidity from system, hurting riskier assets
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Looming behind market fears over the prospect of a historic US default is the less-discussed risk of what would follow a deal to resolve the debt-ceiling impasse.
Many on Wall Street predict lawmakers will ultimately reach an agreement, likely averting a devastating debt default, even if it goes down to the wire. But that doesn’t mean the economy will escape unscathed, not just from the bruising standoff but also as a result of the Treasury’s efforts to return to business as usual once it can ramp up borrowing.