'US debt talks threaten dollar's safe haven status'

from the telegraph.........

"The US risks sending tremors through global financial markets and threaten safe haven nature of the dollar and US government bonds should politicians fail to make significant progress on critical trillion-dollar debt talks this week, experts have warned"

"President Barack Obama and both the Democrats and Republicans in Congress are locked in fraught negotiations aimed at raising the country's $14.3trillion (£8.8trillion) debt ceiling, or the amount it can legally borrow.

Although the US Treasury has said it will no longer have the money to pay all its bills after August 2, many believe the talks need to deliver results over the next five days to then allow a further week to finalise details and get the agreement voted through Congress.

US government bond investors have so far remained sanguine, believing that American politicians would not risk the government's first default - other than a technical one caused by a procedural mistake in 1979 - in its history.

But as the deadline approaches without a deal, that's likely to change.

"There have been no signs of concern so far," said John Briggs, a bond analyst at Royal Bank of Scotland. "But as we get late into this week, if we don't see good signs then we'll see prices move"..................READ MORE