: As McCarthy heads to NYSE for debt-limit speech, analysts say he wants to ‘rally financial players to pressure the administration’

by | Apr 14, 2023 | Stock Market

House Speaker Kevin McCarthy is set to make a fresh move in Washington’s standoff over the U.S. debt limit, as the California Republican is expected to deliver a speech on the issue around 10 a.m. Eastern Monday at the New York Stock Exchange. For months, McCarthy and his fellow Republicans have called for spending cuts in exchange for raising the ceiling for federal borrowing, while President Joe Biden and his fellow Democrats have said the lift should be made without preconditions.

The speaker is coming to the NYSE to get Wall Street on his side, but it’s a tricky maneuver that might not work that well, according to analysts at Height Capital Markets. “We suspect that McCarthy’s speech is designed to rally financial players to pressure the administration to the negotiating table on spending. However, this does exacerbate the risk that the speaker will startle investors more than he intends, in our view,” said Benjamin Salisbury, Height’s director of research, in a note Friday. The Treasury Department said in January that it had started to use “extraordinary measures” because the federal government was running up against its ceiling for borrowing. The Bipartisan Policy Center has estimated that the “X date” — the day when the government can’t meet all obligations — likely will arrive in the summer or early fall, with the exact timing depending heavily on 2022 tax collections that are hitting their peak this month, as Tax Day this year falls on this coming Tuesday. In August 2011, lawmakers approved an increase to the debt limit just hours before a pote …

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