- US debt ceiling looms as political gridlock is expected after mid-term elections.
- Ron DeSantis win by a large margin switches focus on Republican Presidential nominee race
- Inflation still the focus for investors ahead of Thursday’s US CPI reading.
- China’s inflation rate falls more sharply than expected as economy falters
- Marks and Spencer shows resilience with fashion sales rebounding despite fall in first half profits
- Next scoops up the Made.com name as the furniture retailer falls into administration
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown:
”America has decided and, as the electorate awaits the final outcome, it looks increasingly likely that Republicans will gain control of the House of Representatives, which could cause political gridlock in this vast country. With key Senate races still super-close there is a chance the legislative arm could also swing red, while the Executive branch remains blue, which is likely to stymie any major new laws, which may be welcomed by financial markets. Inflation is still considered to be the big threat, and Biden’s huge stimulus plans, designed to ease voters through the pain of the pandemic, and repair crumbling infrastructure, have added to the price spiral despite helping to maintain economic resilience.. However, with defiant Republicans determined not to see taxes rises or more government borrowing at high levels of interest, a debt ceiling crisis could loom into view. Already Biden is considering various strategies to raise current limits, to try and avoid a standoff, which risks further rattling financial markets. We’ve been here before in the Obama years, and, although the US has never defaulted on its debts, even the risk of it could lead to a spike in US Treasury yields which would make the financial situation the government faces even more onerous.
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