Traders Optimistic on Debt Ceiling Deal; The strategist says it’s chance.

Analysts are widely hopeful that a deal to raise the U.S. debt ceiling will pass a divided Congress.

His comments came after US President Joe Biden and House Speaker Kevin McCarthy reached an agreement over the weekend to raise the debt ceiling for the first time to avoid a government deficit.

Investors may find a “market opportunity” in this turmoil, according to Stephen Pavlik, partner and head of policy at Renaissance Macro Research.

Negotiators agreed to some Republican demands, such as stricter work requirements for low-income Americans.

The deal would suspend the debt ceiling until Jan. 1, 2025, and keep it in place until the 2024 presidential election. Spending will also be largely held for 2024, except for defense and veterans, and 2025 will see a 1% increase in spending.

While an agreement in principle has been reached between the two parties, it still needs congressional approval in the House of Representatives and the Senate.

“I think it’s almost certain to pass,” said Jeremy Siegel, a finance professor at the Wharton School at the University of Pennsylvania. He “had very little doubt that they would not reach an agreement … this agreement is going to be finalized and he voted in the affirmative on Wednesday.”

In the year He said he expected to delay the debt limit until 2025 by just one year, saying it was “a good decision.”

“I think they’ve decided after the next election to raise the debt limit and not have another debate that could distract the American people from the core issues that divide the country.”

Still, some Republican lawmakers criticized the deal after its announcement, while other staunch opponents threatened to scuttle the deal.

Pavlik McCarthy predicted a “majority of Republicans” in the House, “but that majority could vary significantly.”

Speaking to “Squawk Box Asia” on Monday, Pavlik said about 75 strong Republicans would likely oppose the deal, pointing to the ultraconservative House Freedom Caucus as well as strong Democrats.

As such, with Republicans holding a slim 222-213 majority in the House, Pavlik said he thinks McCarthy will have to rely on moderate Democrats to pass the bill.

“So I think it’s going to be up to President Biden to get 75 more moderate votes to make sure it’s enough to pass the House. If he does that, passage of the Senate is probably guaranteed.”

For Pavlik, the agreement was a “republican victory”.

“Having a deal in itself is a victory for Republicans,” he said, adding that Biden said earlier this year that he would not negotiate on the debt limit, but was “forced into it.”

The Democratic Party “could have gotten rid of this when they took control of Congress at the end of last year, two years ago. And they chose not to,” he said.

David Roche, president of Independent Strategy and global strategist, saw this as a “democratic victory”.

He expects the deal to pass the House with Democratic support, though, like Pavlik, right-wing Republicans said they would oppose it.

Because the bill would allow borrowing through 2024, Roche said, the nation could put the issue on hold until it comes up again in 2025.

Pavlik said the US Treasury should “fill their coffers”. And if investors are looking at the possibility of the Federal Reserve cutting rates, “this could actually be a given [a] Market opportunity.”

Pavlik suggests that investors can buy Treasury bonds to “lock in some of those high yields.”

Separately, Siegel indicated that U.S. futures were pointing to modest gains, and said the deal was likely because it “clears a little bit of uncertainty.”

However, the main concern for investors will be the Federal Reserve’s “extreme tightening,” Siegel warned.

“Banking problems. This will not lead to a crisis of bank deposits, but a strengthening of credit standards, especially for small and medium-sized companies. And the second half of the year and maybe now we will see. It is focused on those problems.”