By Bernie Becker and Peter Schroeder – 12/16/12 05:00 PM ET
Wall Street is finding it difficult to price the likely impact of a “fiscal cliff” deal on the economy, raising the possibility of a wild swing in the
market if and when a deal is announced.
So far, the markets have largely kept an even keel during the “fiscal cliff” negotiations, reflecting optimism among traders that congressional leaders will not let the recession-inducing policies of the “cliff” take effect.
But analysts in New York say the markets could shift violently once the outlines of an agreement come into focus.
“The debt ceiling — you were either going to default or not,” Michael Feroli, JPMorgan’s chief U.S. economist, told The Hill. “Here there’s a whole range of outcomes.”
While the debate over the fiscal cliff bears some similarities to the debt-ceiling standoff of 2011 — both featured dueling press conferences, closed-door meetings, and plenty of brinkmanship — it also poses a different challenge for the financial world.