“US debt limit reached in February next year… Negotiations standoff in Democratic Party controlled Congress”

There are predictions on Wall Street that the U.S. federal government debt limit of $41.1 trillion will be reached around mid- to late February next year.

Bloomberg News reported on the 8th (local time) that strategists at Bank of America, Barclays, and Morgan Stanley expect this considering the Treasury's recently announced financing forecast and increase in cash reserves.

The current remaining amount up to the limit is approximately $800 billion.

According to estimates released by the Treasury Department last week, federal government net borrowing from January to March next year is expected to reach about $800 billion.

If the U.S. Congress does not agree to raise the debt limit or suspend its application, the Treasury can add about $300 billion to $350 billion through emergency measures.

Strategists such as SMBC Nikko Securities America expect the so-called 'X date' to occur between August and November next year. ‘Day

With the Democratic Party controlling both the Senate and the House of Representatives in this midterm election, the possibility of a long-term confrontation with the Donald Trump administration over government borrowing has increased.

International credit rating agency Fitch warned that if the Republican-led Congress fails to raise the debt limit or postpone its application before the end of its term at the end of the year, the possibility of a cliff-edge standoff will increase.

“We will be watching the budget reconciliation process closely in the coming weeks as the debt ceiling could have a significant impact on money markets next year,” Barclays strategist Samuel Earl said in a client note.