Wednesday, January 2, 2013

Whew! Markets Relieved at Fiscal Deal, but Rocky Path Ahead

From CNBC: Financial markets are relieved that the U.S. Congress has finally approved a deal to avert a "fiscal cliff", but analysts warn that investors now face a rocky two months ahead as negotiations over the debt ceiling begin.
This relief in markets, however, is likely to be brief, says Andrew Economos, managing director and head of sovereign and institutional strategy with JPMorgan Asset Management in Hong Kong. This is because the real work will begin with talks to ink an agreement on the U.S. debt ceiling, without which the U.S. may default on its debt obligations. The U.S. is scheduled to hit its debt ceiling on February 28.

"This will plague us at least until the end of the first quarter because we have got these discussions about raising the debt ceiling which will lump all negotiations – expenditure, tax hikes – into one. So the first quarter is going to be choppy," Economos told CNBC Asia's "The Call" on Wednesday.

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