Boehner departure means government shutdown more likely, default a possibility

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John Boehner is not conservative enough. At least that’s what the firebrand Republicans in the US House of Representatives believe. And so he has resigned from his position as Speaker of the House and will resign Congress altogether as well. Boehner has been more eager to compromise and reach a grand bargain. With his removal from office, it opens the way for a more adversarial tone in Washington. And I believe this means the chances of a government shutdown increase significantly. A default on US government debt is not completely out of the question.

This is bearish for stocks and lower-rated bonds. But ultimately it will prove bullish for government bonds, even with the default risk, because the implications are negative for growth.

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