30 May 2023 | News & Feature

The 2023 debt ceiling negotiation: The epilogue

  • The US government reached an agreement to lift the debt ceiling without a nominal cap until 2025. Despite the lack of a nominal cap, the US government’s ability to expand its fiscal commitments appears to be limited, suppressing the outlook for aggregate demand in the US.
  • A potential increase in UST issuance may reveal the liquidity problem in the UST market and the banking sector, given the dwindling demand for UST from non-bank investors while UST bill issuance may crowd out liquidity from banks.
  • The continued robustness in headline economic indicators appears to strengthen the DXY. However, the Rupiah may continue to be stable thanks to foreign investors’ appetite for Indonesian financial assets.