There is currently a fierce debate in the US Congress over the future of American fiscal policy. This debate has taken on a new significance as some projections for this year’s budget deficit exceed $400 Billion. Thus far, the bond markets and forex markets have largely ignored the prospect of a larger-than-expected budget deficit, as treasury yields and the USD have remained stable. The consensus is twofold: first, the budget deficit will continue to play a backstage in currency markets to the trade deficit and other economic indicators. Second, as long as foreigners continue to purchase US Treasury Securities, the budget deficit will remain a moot issue. CNN reports:

If bond yields and the value of the dollar move this week, according to economists, it’s more likely to be because of signals from the Federal Reserve, or a Consumer Price Index report that shows inflation dramatically better or worse than current forecasts.

Read More: Markets and the deficit: No fear