$FXUS Tensions over the debt ceiling will likely be punted to December after Senate Republican leader Mitch McConnell offered to raise the limit to avoid an immediate risk of default. While Democrats and the GOP are still working on an agreement, any deal would set up another bruising political fight for the end of the year. Earlier on Wednesday, Defense Secretary Lloyd Austin warned that a default would "threaten national security" and America's ability to defend itself. Market movement: As it looked like the U.S. was moving closer to a default on Wednesday, all 11 sectors of the S&P 500 were flashing red. However, as soon as top Senate Republicans proposed the short-term debt limit extension, the major indexes turned around to close the day in the green. Some strategists, like Wells Fargo's Paul Christopher, still caution that while the debt ceiling drama could spark more market volatility, the "economic expansion ultimately will be the main influence on equity and bond prices through next year." "Basically, I'm glad that Mitch McConnell finally saw the light," said Senate Budget Chair Bernie Sanders. The Republicans "have finally done the right thing and at least we now have another couple months in order to get a permanent solution." "This will moot Democrats' excuses about the time crunch they created," McConnell fired back, adding it would "give the unified Democratic government more than enough time to pass standalone debt limit legislation through reconciliation." Why does the U.S. have a debt ceiling? The U.S. first instituted a statutory debt limit with the Second Liberty Bond Act of 1917, setting the aggregate amount of debt that could be accumulated through individual categories like bonds and bills. Later in 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments. The debt limit exists to ensure the "power of the purse" stays with the legislative branch and frees up Congress from approving each individual expenditure, though most countries do not have a limit and debate the funding of their spending during the budgetary process. Первоисточник: Seeking Alpha, статья Debt Drama, 07.10.2021.