Tag: debt ceiling

US on track for only 1.6% real GDP growth in 2013

US on track for only 1.6% real GDP growth in 2013

The US is now on track to reach only 1.6% real GDP growth for 2013 – in spite of the extraordinary amount of central bank stimulus. The sad part about this weakness is that to some extent it has been self-inflicted. Policy uncertainty, including “taper”-related fears and the recent dysfunction in Washington have continued to impede growth in the United States.

Attention Shifts from US Fiscal Policy to Monetary, Pushes Dollar Lower

Attention Shifts from US Fiscal Policy to Monetary, Pushes Dollar Lower

A last minute deal was struck that re-opens the US federal government and removes the immediate threat of default, but rather than turn the attention from the US, the focus has shifted from fiscal policy to monetary policy. In particular, the Beige Book yesterday underscored the economic uncertainty sparked by the government shutdown. This coupled with the recent string of private sector data, such as the ADP jobs estimate, ISM, auto sales, some regional Fed surveys and consumer confidence point to some loss of economic momentum. In turn, more investors recognize that the Fed is unlikely to begin any tapering this year.

In the event of a missed payment, the US has three days to cure

In the event of a missed payment, the US has three days to cure

US CDS is based on treasuries (linked to a specific security – the co-called “reference obligation”), which according to the official offering document (see offering circular here), do not have a “grace period”. Under such circumstances sovereign CDS documents dictate that the grace period is three days before an event of default is declared.