SEI Investments shares their Commentary about the debt ceiling issue. The summary is below:
Our View
Neither we nor any of our managers anticipate a long-term default. Things will work out in the end; but as the deadline approaches, increased volatility is expected. The specifics of what happens next are anyone’s guess. It is likely that any agreement on the debt ceiling will be a temporary one. This would allow for additional negotiation and provide a path toward a grander compromise that includes funding of the budget, a debt-ceiling increase for the entire 2014 fiscal year and a modification of the sequester in exchange for entitlement reform. Alternatively, the debt ceiling could be raised without granting a continuing resolution to fund the government. This would avert disaster but maintain the status-quo level of governmental dysfunction. In any event, no responsible politician wants to throw the economy into disarray by allowing a technical default of the government. Memories of the debt-ceiling debacle of 2011 are still too fresh. Click here for the entire Commentary