As was widely expected the democrats and the republicans reached a last minute deal on Capitol Hill last night. The US debt ceiling has been raised and investors can breathe a sigh of relief, for now at least. However, the deal is only temporary and will fund the US Government through to 15th January 2014, and suspend the debt limit until 7th February, setting up another round of confrontations between US politicians in the New Year. The fallout from the US debt financial crisis continues to effect markets and investors. Since 2008 there have been unprecedented levels of intervention by politicians across the world and this is likely to continue until the Quantitative Easing stimulus is withdrawn and economic growth becomes self-sustaining. It is difficult to predict the impact political decisions will have on the short term performance of stock markets, other than they don’t like uncertainty. As expected, US and Asian markets rose as a result of the deal. Investors are better off ignoring short term noise and continue to focus on their own investment goals and invest for the long term. Western economies are slowly recovering, whilst companies are in good shape. However, the US shutdown will affect the US economy and I expect interest rates will remain low for some time.
Posted on: Fri, 18 Oct 2013 12:05:52 +0000
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