INSTANT VIEW - U.S. debt limit hike has enough votes to pass

NEW YORK (Reuters) - Congress buried the specter of a U.S. debt default by finally passing a deficit-cutting package on Tuesday, but the shadow lingered of a possible painful downgrade of the top-notch American credit rating.

COMMENTS:

BILL GROSS, CO-CHIEF INVESTMENT OFFICER AT PACIFIC INVESTMENT

MANAGEMENT CO., NEWPORT BEACH, CALIF.

"Weak medicine that cannot cure the disease. The U.S. has debt and annual deficits much larger than the public or the press is willing to acknowledge and a 1 trillion dollar downpayment over 10 years that has yet to be specified seems like a booby prize -- especially given the turmoil that Washington has put this nation through over the past few months.

"Until we have a more balanced approach to the budget that includes both spending cuts and revenue raising as well as programs that focus on job creation instead of political fundraising, the dreaded ratings agency downgrade is in our immediate future. This agreement, more than anything, seals the fate of the dollar-- it is headed downward."

JOHN KILDUFF, PARTNER AT HEDGE FUND AGAIN CAPITAL LLC IN NEW

YORK

"The debt ceiling distraction may now be behind the markets, but the damage has been done.

"We are witnessing a quickly deteriorating economic backdrop that will pressure all asset classes. Policymakers need to next implement measures that will foster growth.

"Certainly, lower prices at the pump are on their way, which will be a real benefit to consumers but for reasons that are not exactly for the good."

MILLAN MULRAINE, SENIOR U.S. MACRO STRATEGIST, TD SECURITIES,

NEW YORK

"In some ways it was more or less a done deal. In terms of what's next, the next big story for this legislation is later on this year when we have that committee that's supposed to come up with $1.2 trillion worth of cuts. That will be crucial in determining what the nature of cuts will be and will provide some insight on where we see the economy going."

"I think until we hear otherwise, a downgrade is still on the agenda... But we're still awaiting confirmation."

"I think the markets at this point also believe that a downgrade has been averted by this deal, otherwise it would've been unlikely for us to see Treasuries rally as we have. Still at the end of the day, I think at the end of the day we have a few months of reprieve."

FRED DICKSON, CHIEF MARKET STRATEGIST AT THE DAVIDSON COS. IN

LAKE OSWEGO, OREGON

"No reaction at all...I would have expected to see a (stocks) relief rally almost immediately upon passage in the Senate. Hasn't happened.

"It really looks like investors have made the shift from Washington to what I'm calling economic realities.

"What we're dealing with is some disappointing economic news, and investors at this point I think have anticipated passage. Investor attention is now focused on Friday's jobs report and still digesting yesterday's ISM numbers."

CHRIS JARVIS, SENIOR ANALYST, CAPROCK RISK MANAGEMENT, HAMPTON FALLS, NEW HAMPSHIRE

"With the debt ceiling bill passing as expected, we believe the markets, specifically riskier asset classes such as equities and commodities, are due for a relief rally especially after the recent sell-off.

"We favor commodities in anticipation of a debt downgrade for the U.S. credit rating, which would likely weaken the dollar and favor commodity prices. In short, today's passing of the bill has already been priced into the market as investors now look ahead to a possible downgrade for the U.S. debt rating following the vote."

SCOTT BROWN, SENIOR ECONOMIST, RAYMOND JAMES, ST. PETERSBURG,

FLORIDA

"(The possibility of a downgrade) is still pretty low at this point. I think the rating agencies have to realize the consequences of doing so. And the fact that the U.S. has made some progress in (improving) the long-term budget outlook. I don't think it's likely, but it's not out of the realm of possibility.

"It certainly would have ripple effects through the market. You have a number of entities that are required to invest in AAA assets like money market funds. What are they going to do? Even if it gets downgraded to AA, the U.S. would still be seen as a safe asset.

"It's not just treasuries --- Freddie and Fannie's debt, the states, thousands of municipal securities would be downgraded. The consequences would still be pretty severe."

ASHA BANGALORE, ECONOMIST, NORTHERN TRUST, CHICAGO

"The signing is essential to prevent an induced crisis, but it doesn't address the fundamental problems of the nation.

Going forward, we need to address these problems so the economy can get back on its feet.

"With this austerity proposal, it's hard to see how this is favorable for a fragile economy."

MICHAEL MORAN, CHIEF ECONOMIST, DAIWA SECURITIES AMERICA, NEW

YORK

"The vote is a positive in that it removes a great deal of uncertainty from the market.

"If you're assessing it as a significant step to reduce the budget deficit, it's not impressive from that perspective. The changes are small and not specific. Future Congresses could sidestep some of the planned cuts. We're still a long way from a sustainable fiscal situation.

"One of the big concerns is the effect on the economy. That is a negative, but not a big negative. The fiscal restraint scheduled for 2012 is modest. There's a chance we could see more substantial cuts in 2013. The long-run budget situation is bad enough that Congress has to focus on that.

"The lesson we have learned is the importance of keeping your fiscal house in order. Because we are overextended, we don't have the flexibility to put fiscal stimulus in place now. We are handcuffed at a time when you would want to be supporting the economy."

TOM BENTZ, DIRECTOR, BNP PARIBAS COMMODITY FUTURES INC IN NEW

YORK

"The passing of the US debt ceiling bill should already be priced into oil markets. Not expecting any major fireworks. Markets are more concerned about the recent trend of weaker economic data."