WASHINGTON (MNI) – The following is a roundup of key developments
and events Friday on the ongoing stand-off over the U.S. debt
ceiling:

* Having pulled his revised debt ceiling bill literally minutes
before the House was scheduled to vote on it Thursday evening, House
Speaker John Boehner will confer with his Republican caucus Friday
morning to determine the best way to proceed. Boehner’s decision to
first delay and then cancel the House vote Thursday is a clear
indication that he is not confident he has enough Republican votes to
pass his plan. Boehner appears to have two options: revise his bill yet
again and likely delay the House vote until Saturday or to redouble
efforts to secure the needed 216 votes to pass it.

* The Treasury Department would likely pay bondholders before
other creditors if Congress doesn’t raise the debt ceiling before the
government runs out of cash, two people familiar with the matter said
Thursday, the Wall Street Journal reported. Treasury officials have
prepared an emergency plan to prioritize payments and avoid default if
the $14.29 trillion federal borrowing limit isn’t raised by Tuesday, the
people said.

* House Majority Whip Kevin McCarthy said Thursday night the
House will not hold a vote on the Republican debt ceiling package,
pushing back until at least Friday a critical House vote that was first
planned for Wednesday. The decision by Boehner to delay the House vote
yet again was driven by a vote count that shows that he does not have
216 Republicans votes to the pass a bill in the House. There are 240
Republicans in the House and Boehner can only afford to lose 23 votes.
All Democrats are expected to vote against the bill.

* Amid concerns that the U.S. debt limit stalemate will further
erode the value of the dollar and fuel inflation globally, some China
economists argue for a widening of the yuan-dollar trading band, saying
it is a way to protect the domestic economy from the risk of a U.S. debt
default and potential global economic volatility.

* Current conditions continue to support the Bank of Japan’s
baseline view on recovery but further yen strength and stock weakness
next week in reaction to U.S. debt negotiations could prompt
policymakers to consider policy action.

* Risk aversion remained in place through European morning
trade, with the early European break back below $1.4300 seen on Moody’s
placing Spain on review for a possible downgrade. The rate settled
between $1.4250/1.4300 for the balance of the session with markets
awaiting developments in the US debt ceiling impasse.

* The absence of any breakthrough in the standoff in Washington
over the debt ceiling extension continued to weigh on Asian stock
markets Friday. The Hang Seng Index ended down 0.58% at 22,440.25 while
Shanghai stocks lost 0.26%. The Shanghai Composite Index rose as much as
0.42% in afternoon trading as talk swept through the market of a policy
easing. The chatter quickly died out, and the index returned to the
negative territory where it had spent much of the day. It fell 2.5% over
the week.

–Editor: Brai Odion-Esene; besene@marketnews.com

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MGU$$$,MFU$$$,MCU$$$,M$$CR$]