Hitting a hard debt ceiling and missing payments to bond holders is a more serious issue.
The markets took note of the drama and sold off last week. The Dow was down 0.8%, the S&P was down 0.7%, and the Nasdaq was down 0.6%. Thursday the S&P was down 1.5%. It is a shame because the economy is doing well.
We currently like the prospects of a continued, but slow rise in the markets. There is no sign of a coming recession at this point.
Bottom line: both the trend in interest rates (lower yields) and the trend in the overall market (the tape) are bullish. The balance of evidence remains bullish for both equities and fixed income.
“Mr. Smith goes to Washington” should be required viewing for all our representatives.