Westpac - "SCENARIOS
1. Debt limit raised by at least $1trn well ahead of deadline: <5%.
2. Debt limit raised late Feb, very close to default date: >85%
3. Government goes into partial shutdown in order to make interest payments: 10%.
4. Debt limit raised without fiscal concessions/ President Obama invokes 14th Amendment: 0%.
BOTTOM LINE FOR MARKETS: Under our most likely scenario, risk currencies should suffer damage at times, especially in mid- to late February. Both USD and Treasuries should thus find safe haven demand as the Congressional name calling reaches its peak. But with a ratings downgrade unlikely - at least not yet - and investors likely to remain confident that default is not seriously being considered, the damage to the likes of AUD, EUR and NZD should be contained. The episode may well be best viewed as a chance to buy dips in risk assets amid mostly more favorable global conditions in H1 2013. But risks to this view are skewed to the negative side for risk assets, with a prolonged standoff more likely than a quick resolution."