February Report From a DC Insider

[Mike McKenna is a long-time analyst/advisor/polling professional in Washington, DC. Also a former Trump staffer, he currently writes op/eds for the Washington Times. He sends out comprehensive state-of-play reports to a select email distribution. This is his report for February.]

Debt ceiling and rate increases

Don’t be amazed if the debt ceiling story gets more hairy before it settles.  Both sides have political interests in increasing the volume on the issue.   So, it is probably wise to anticipate more headline risk in the immediate future.

The good news is that we probably wind up with a deal which will include raising the debt ceiling for a year (or maybe two) and spending reductions of about $1 trillion in the budget spread over the next ten years.

Financial types don’t appear to be too concerned about all of this.  Yields on four-month Treasury bills for the May and June auctions (when this particular clock is supposed to strike midnight) aren’t rising, and lots of financial people have been through this sort of headline risk before, so they are  difficult to impress.