(Bloomberg) -- The standoff in Washington that’s increasing the chances of another U.S. government shutdown at the end of the week is also raising the specter of bigger risks as the reinstatement of the debt-ceiling approaches in early March.
Moody’s Investors Service analysts have warned that shutdown 2.0 could have a “more severe impact” on U.S. output. And if it were to extend beyond the March 1 end of the suspension of the current cap on America’s statutory debt capacity, “it would complicate negotiations over the debt ceiling.”
“Everywhere I look, whether it’s this, a weak economy, or disappointing tax refunds it’s a plus for bonds,’’ said Greg Valliere, chief global strategist at Horizon Investments, said on Bloomberg TV Monday. The inability of politicians to make a deal is “‘mind-numbing.”
Isaac Boltansky, a senior policy analyst at investment advisory firm Compass Point, said on Bloomberg TV Monday that the odds of a shutdown are now about 60 percent, up from 30 percent last week.
“This isn’t really solely a shutdown issue, it’s indicative of the legislative brinkmanship and the crisis governance that is really going to dictate the next year and half,” which includes debt-ceiling re-negotiations, he said.
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