January 23, 2013

U.S. Debt Debate Tops Global Investing Concerns: Poll

Bloomberg poll finds Washington’s recurring debt tussles outweigh other important issues

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Think of the United States as an evil genius bent on world destruction. The rest of the world does—sort of.

A new Bloomberg poll finds U.S. budget “discord” more of a threat for investors than either Europe’s fiscal crisis or a slowdown in China.

With the government within weeks of reaching its borrowing limit, the news service notes that 36% of respondents cite the nation’s fiscal woes as the biggest threat, compared with 29% who choose Europe’s sovereign debt crisis and 15% who name a slowing Chinese economy, according to the quarterly poll on Jan. 17 of investors, analysts and traders who subscribe to Bloomberg.

Almost half of investors–47%–say Washington’s recurring fiscal showdowns are discouraging them from investing in U.S. financial markets, according to the Bloomberg Global Poll. Included in that amount are 39% who say they would normally be investing more; 8% say they are actively selling.

Forty-five percent of respondents say the political confrontation isn’t affecting their investment decisions, while 3% are increasing their U.S. holdings.

Treasury Secretary Timothy Geithner says the government could hit its $16.4 trillion debt ceiling as soon as mid-February,” Bloomberg notes. “By a margin of 56% to 40%, investors embrace House Republicans’ view that any increase in the limit should be matched by equal reductions in future spending.”

While investors in the poll are voicing concern about the future, the news service concludes that the markets “so far are showing little apprehension.”

The 10-year Treasury yield was at 1.84% on Tuesday in New York. That’s up from 1.7% on Dec. 28, yet well below the 5.4% average over the past 25 years, according to data compiled by Bloomberg.

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