U.S. Default Risk Rises: Debt Limit Negotiations Resume

• Debt limit negotiations between President Joe Biden and House Speaker Kevin McCarthy are underway as the risk of a U.S. default increases.
• Treasury Department is taking measures to avert an unprecedented default, such as probing government agencies about the flexibility of impending payments.
• High volatility is expected in both the stock market and crypto sector upon default.

Debt Limit Negotiations Resume

The Treasury Department is taking measures to avert an unprecedented default as debt limit negotiations between President Joe Biden and leading Republican Kevin McCarthy resume on Tuesday.

U.S Default Risk Increases

High volatility is expected in both the stock market and crypto sector upon default if measures are not taken to boost borrowing, increase tax collection, or reduce expenditure before June 1st when the federal government might potentially miss a payment for the first time in modern history. The Treasury has reportedly sought out other government departments to see if they can defer payments that are due before the beginning of June but has not asked any government agencies to extend payment deadlines.

Treasury Seeks Flexibility from Agencies

In order to prevent default in the near future, the Treasury has sent out a document instructing federal agencies to take certain new measures so that it can be informed of their expenditures carefully and possible delay payments until June 15th when a large number of quarterly tax payments are due to appear in records which could pave way for new accounting methods.

Crypto Sector At Risk

High volatility is expected in both the stock market and crypto sector if United States fails to make its debt payment by June 1st which could have serious implications on financial markets worldwide including crypto markets where investors have already started converting their assets into liquid cash ahead of possible crash due to US Default risk.

Conclusion

Debt limit negotiations will be resumed on Tuesday between President Joe Biden and leading Republican Kevin McCarthy with Treasury taking measures such as seeking flexibility from other agencies about impending payments while high volatility is expected in both stock market and especially crypto sector upon US Default risk increasing day by day with no clear solution yet in sight.

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