Veteran hedge fund manager Sushil Wadhwani has warned that a deeply divided US Congress may push the country to the brink of a default and credit downgrade before it resolves its current standoff over the debt ceiling, according to a report by Bloomberg.
Speaking on Bloomberg TV, Wadhwani, the chief investment officer for PGIM Wadhwania and an advisor to UK Chancellor Jeremy Hunt, said it may take a market shock worse than that seen in 2011 to “get these folks to agree”.
Rates on short-dated bills have soared and contracts against a default over the next year are trading at a near a record on concerns over a possible debt ceiling default. Twelve years ago, a similar impasse over the borrowing limit triggered a 16% drop in the value of the S&P 500 in just 10 days, as well as the first ever US credit downgrade.
