1:11 p.m. ET, September 22, 2021
Between Evergrande and the debt ceiling, the Fed won't budge on policy today
From CNN Business' Anneken Tappe
Fear that Chinese real estate developer Evergrande might stumble under its enormous $300 billion debt pile weighed heavily on the market at the start of this week. As of midday, it is rebounding hard.
"The markets have concluded that it's not going to be a systemic event [if Evergrande defaults] that will bleed into other markets... and look like they have moved on," said Danielle DiMartino Booth, chief strategist and CEO at Quill Intelligence.
In the United States, "we live in an economy where defaults filter through to all kinds of investors," she said, adding that it's unclear what a default in China might look like, not least because the Chinese government might step in.
Evergrande isn't the only source of drama this week, as the debt ceiling debate in Washington is raging. With so much uncertainty in the market it seems unlikely that the Federal Reserve will make any big moves in its policy update this afternoon.
"In the Fed's capacity as the shepherd of financial stability, I certainly think the Fed is watching" what's going on with Evergrande, DiMartino Booth said on the CNN Business digital live show
Markets Now.
With regards to the debt ceiling and the worry that the federal government could run out of money, "I think there's a higher probability... that we do see a debt default or something that appears to say we're at the brink of default," she added. "Congress can legislate all day long and pass as much stimulus as they want but until the debt limit is raised you can’t pay for it."