The U.S. federal government’s fiscal year-end is September 30th plus the federal debt limit is expected to be reached around the last week in October or the first week in November.
The White House has been in talks for weeks with a few moderate republicans in the senate to find a compromise on these fiscal issues. President Obama is looking for a replacement spending deal for his sequester cuts that took effect earlier this year.
Yesterday, Senator Bob Corker of Tennessee said, “It is very evident that there isn’t any common ground and we’ve all agreed there is no reason for these talks to continue.”
Congress returns to work on September 9th and will have to quickly figure out how to fund the government beyond September 30th. Meanwhile, Tea Party groups and dozens of House republicans are urging Speaker Boehner to block any spending deal that doesn’t eliminate funding for Obamacare.
No matter what your political opinion may be about these issues, the financially literate always adjust and align their finances with reality.
Remember that each time there was a debt ceiling showdown in Washington that interest rates went up temporarily and the stock market declined. So you may want to adjust your balance sheet accordingly:
- Avoid or scale out of long-term bonds and medium-term bonds
- Lock-in low-rate mortgages
- If you like CD’s, have cash ready for any up-tick in CD rates
- Postpone additional stock market purchases until the decline
However Washington’s debt showdown may play out, like every financial event, be sure that you are aligned to both defend your assets and hopefully profit from their decisions and market gyrations.