Stocks are regaining ground after huge selloff

Washington is in midst of a dramatic debt showdown with lawmakers grappling to lift the debt ceiling to keep the government from running out of cash next month.

But Greg Valliere, chief US policy strategist at AGF Investments, doesn’t believe a shutdown is looming.

“I think there’ll be a deal in the next 24 hours,” he said on the CNN Business’ digital live show Markets Now. “Not that the market would sell off if there wasn’t.”

The chance that America would default on its debt obligations is “very slim, 5% or something like that,” Valliere said.

“I think there’ll be a deal,” he added, “and if not, I think the Fed still has some more tricks up its sleeve.”

That said, if the Federal Reserve did have to step in, that wouldn’t fully resolve the issue and might well roil the markets.

Meanwhile, President Joe Biden’s spending plans might well get a haircut, even though the infrastructure plan is popular among Republican policy markers. Even with a lower sticker price, however, the government will still end up spending a lot of money, Valliere said.