Traders Brace For Next Market Hurdle: U.S. Budget Battle

With Black Monday behind them, investors returned to U.S. markets as they appeared to be stabilizing by Thursday morning. However, comments from Republican Presidential hopeful Donald Trump on Wednesday reminded Americans that there could be a bumpy road ahead as congress returns from vacation to resume budget negotiations.

Worth The Fight

Speaking on Bloomberg TV, Trump said he believes that Republicans in congress should hold out in budget negotiations and refuse to raise the U.S. debt limit in order to force President Barack Obama to concede to spending cuts. The outspoken presidential contender has been very vocal about his opinion that government spending is out of control, and he believes that Congress should use its power to force change in Washington.

Related Link: How Every Presidential Candidate Wants To Change The Economy

Another Shutdown?

If the negotiations do come to a stalemate, the Treasury Department has estimated that the federal government can continue running until the end of October. On Tuesday, the Congressional Budget Office extended that forecast, saying that the debt limit won't need to be raised until December.

Could Go Either Way

Congress is set to reconvene on September 8, when budget negotiations will likely begin. With the most recent market turmoil from China still weighing on investor confidence, lawmakers from both sides of the aisle will be hesitant to cause another upset. However, if no deal is reached before the Thanksgiving holidays, markets are likely to become skittish.