Obama, meanwhile, said that the shutdown had done great harm. “It’s encouraged our enemies,” he said. “It’s emboldened our competitors. And it’s depressed our friends who look to us for steady leadership.”
World markets were largely lower Thursday after having risen earlier this week on expectations that a deal would be made.
“People aren’t breathing an enormous sigh of relief and thinking, ‘Well, thank goodness that’s over,’ ” said Jonathan Loynes, chief European economist at Capital Economics in London. “I think they are a little astounded at the whole episode and worried that we’ve got months of uncertainty about the debt ceiling ahead of us.”
Congress voted Wednesday to reopen federal agencies, call civil servants back to work and raise the debt ceiling, after a 16-day government shutdown. But the deal leaves negotiators to resolve longer-term budget issues over the next few months, and they will confront the debt limit again in February.
Japan’s main stock market index, the Nikkei, closed Thursday up 0.8 percent, after earlier hitting a three-week high, while Hong Kong’s Hang Seng index fell 0.6 percent. In London, the FTSE-100 index closed up 0.1 percent, while Germany’s DAX closed down 0.4 percent. In China, where the economy is slowing, there were renewed calls for the country to diversify its foreign exchange reserves, which contain $1.3 trillion in U.S. Treasury bonds. There was also recognition that this was easier said than done. On Monday, China’s state-run Xinhua news agency published a commentary calling for a “de-Americanized world.”
The U.S. currency’s dominant position in global finance is still “unshakable,” said Sun Zhe, director of the Centre for U.S.-China Relations at Tsinghua University. But, he said, the “political show” in Washington was still damaging.
“People start to doubt American credit, even the American creed, including the market economy and American democracy, and question whether the U.S. still has the capacity to manage the world economy,” Sun said.
Beijing’s U.S. Treasury bond holdings have fallen slightly in the past year and, more significantly, as a proportion of total reserves in the past decade. The purchase of U.S. Treasury bonds is a virtually automatic consequence of China’s decision to intervene in the foreign exchange market to prevent its own currency, the yuan, from appreciating, analysts said.