US debt ceiling raised and so are the stakes. The US House passed a bill to raise the debt ceiling until May 2013, and has tied a clause to keep lawmakers from collecting their salaries if they do not pass a budget by mid-April. The failure to produce a credible budget in April would severely threaten to undo the return in risk appetite.
There are now doubts that the cuts in defense spending due to come in March won’t be reversed, taking budget forecasters by surprise in a clear sign that politicians are continuing to use the same political blackmail tactics used in 2011 when the US lost its coveted AAA rating from S&P. The fact that both the US and Canadian mints have run out of silver coins, may be a sign that demand for insurance against the worst case outcomes remains strong among certain investors.
Key events to watch this week: FOMC and US non-farm payrolls. The payrolls data, a key bellwether for US economic performance will be closely watched. Following the FOMC’s December meeting where a discussion on QE exit timing was first raised, there will be heightened interest in this week’s meeting.
ETFS Physical Swiss Gold Shares (NYSEArca: SGOL)
