The White House and the House speaker have reached a bipartisan agreement that would raise the government’s $31.4 trillion debt ceiling for two years. The House and the Senate are expected to vote this week on legislation ratifying the deal. If approved, the legislation would go to President Biden to be signed into law prior to the June 5 deadline, which is when the U.S. Treasury Department has indicated it would no longer be able to finance all government operations.
In light of the agreement, investors may be wondering how they should respond now that lawmakers appear to be on a path to resolution. We are pleased that resolution appears likely because failure to raise the debt ceiling would increase market volatility and damage U.S. credibility. But our advice to investors is simple and hasn’t changed—maintain a long-term perspective.