Part 2/9:
The political standoff, primarily driven by the Republican-controlled House demanding sharp spending cuts in exchange for raising the debt ceiling, intensifies fears of a default. If the debt ceiling isn’t increased, the immediate consequence could be increased volatility in financial markets, especially within the equities and bond sectors. Investors are closely watching this timeline, as a default would likely cause a spike in U.S. treasury yields and market turbulence, particularly impacting interest rate-sensitive sectors and companies holding U.S. Treasuries as collateral.