The debt ceiling negotiations continued to dominate the market’s focus this week. Acropolis hosted a webinar for clients and friends on Thursday that focused on the US debt ceiling negotiations and the economy. The presentation slides are posted on our blog, along with some links to past articles written by members of the Acropolis blog team.

http://www.acrinv.com/20110728733/blog/acropolis-webinar-debt-ceiling

Most of the Treasury curve bounced around without a definitive move before Friday, when Treasurys rallied and the ten-year yield fell 17 bps on the day to 2.78% as of 3:30 Eastern time. Despite the issues surrounding a possible downgrade of US Treasurys, they continue to maintain their place as a refuge from risk on volatile trading days.

To talk about the negotiations specifically would be pretty useless at this point. The bills are changing constantly and the two sides are still very far apart. As of this writing, the House is set to vote on the latest version of Speaker Boehner’s plan Friday night. It is expected to pass the house and fall short in the Senate, much like the “Cut, Cap and Balance” plan, because it too contains a balanced budget amendment.

Some analyst looking at the most recent tax receipts are saying that higher than expected revenues have bought the government some time beyond the August 2 deadline, but that is still unclear. The market is treating the Treasury Department’s deadline as the real deal and still expects a deal to get done in time to avoid a default as well as a downgrade below AAA.

Have a great weekend.

Cliff J. Reynolds Jr., Investment Analyst