The worldwide panic over the US monetary policy had subsided after the Federal Reserve halted its planned stimulus reduction. Meanwhile, Washington had brewed another storm in a teacup which was seen to reach its climax next Monday. This was regarding the proposed raise of the national debt limits and the Obamacare battle between US lawmakers and the President. The tension was also followed by the debt limit vote that is required to prevent a mid-October shutdown.
Senator John McCain told reporters last week, "We will end up not shutting down the government and not de-funding Obamacare. I don't know what all the scenes are, I've seen how this movie ends."
Markets had feared that all plot twists would lead to an economic horror film. Markets also feared that consumer confidence and businesses would be crushed leading to a damaged economy and a halted economic growth. This could also lead to a major sell-off in global stock markets, according to a Reuters report. The same scenario was last seen when the US Treasury had almost reached default in July 2011.
However, the risks seen this time were much smaller than in 2011. This had caused markets to fear less due to a transformed dynamics in the US budget battles.
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