On Monday investors were trying to figure out which end was up after late developments in Congress again led to speculation that lawmakers would put partisan politics ahead of a debt deal.
In a live interview on CNBC’s Halftime Report FBR policy analyst Ed Mills says that according to his proprietary research, there’s a growing probability that Washington leaves Wall Street hanging.
”We see a 40% chance that we get to Tuesday and no deal is done,” he says. “That’s pretty high.”
In the event lawmakers crash the deadline, “the US Treasury takes the lead in deciding who gets paid what -- and in what order if we hit the debt limit,” explains CNBC's Jane Wells.
Of course almost every pro and pundit agree that sooner or later lawmakers will achieve some kind of resolution even if its only a Band-Aid.
It’s really what happens next that could be more damaging for investors.
That’s because if and when a debt deal happens – the cuts included in the legislation may not be enough to prevent S&P from downgrading the credit rating of our nation. “That’s the wildcard,” says Mills.
”I fully expect to see the S&P downgrade the US credit rating within the next 60 days,” adds Fast trader Joe Terranova.