President Biden and Speaker Kevin McCarthy reached an agreement over the weekend to lift the debt ceiling by more than $4 trillion until 2025, narrowly avoiding the financial turmoil that would have ensued following a default. Because of the approximately 10% increase in fiscal year 2023 ... READ MORE >
debt ceiling
Fitch puts U.S. on ratings watch negative
The announcement on Wednesday that Fitch Ratings had placed the United States AAA credit rating on “Rating Watch Negative” is the latest sign that the policy brinkmanship over raising the nation's debt ceiling is extracting a growing price on the U.S. economy and jeopardizing well-functioning ... READ MORE >
RSM US Financial Conditions Index: Debt ceiling standoff to cause volatility
U.S. financial conditions remain a drag on overall economic activity. Our composite RSM US Financial Conditions Index remained at 0.9 standard deviations below neutral on Friday, corresponding to higher levels of risk than would normally be priced into securities. As investors await a ... READ MORE >
What would happen if the government defaults on its debt?
Another debt ceiling crisis is approaching, and it is in no one’s best interest. Policy brinksmanship over lifting the debt ceiling and the threat of default it brings is increasing the cost of doing business and carries far more risk than is commonly acknowledged. At its core, the stand-off ... READ MORE >
Is a debt-ceiling crisis coming? Money markets are saying yes.
Risks around to the economic outlook linked to a looming debt-ceiling crisis have been in the market for some time. This pricing in of risk has become particularly apparent now that both Treasury Secretary Janet Yellen and the nonpartisan Congressional Budget Office have put Congress on ... READ MORE >
The debt ceiling stand-off: Frequently asked questions
As middle market businesses weigh the costs of the stand-off over raising the nation's debt ceiling, we offer some answers to frequently asked questions about how the dispute will play out. What is the debt ceiling? The debt ceiling sets a limit on how much debt the U.S. government can incur. ... READ MORE >
Rising interest payments, deficits and the debt ceiling crisis
The mounting stand-off over raising the federal government’s debt ceiling has put a renewed focus on the rising cost of financing the nation’s debt. While these interest payments are rising quickly as the Federal Reserve raises rates to tame inflation, it’s important to have some perspective. As ... READ MORE >
Measuring the risk of default in the debt ceiling crisis
The standoff over raising the federal government’s debt ceiling is not the first time that members of Congress have threatened to default on payments of existing U.S. public debt. During past episodes, the policy brinksmanship has pushed up the cost of financing, caused a selloff in equity markets and ... READ MORE >
Chart of the day: Pricing in the December debt cliff
The Treasury bill market is pricing in a shortage of notes in November as the threat of a debt ceiling crisis grows. Despite the recent legislative passage of a 10-year infrastructure investment plan, Congress and the Biden administration are no closer to an agreement on lifting the debt ceiling. We ... READ MORE >
In a possible sign of things to come, looming debt-ceiling crisis induces a flight to cash
The front end of the Treasury curve is flashing red because of the possibility of another black swan event—the threat of default on Treasury securities on or around Oct. 18. Investors have begun dumping their safe-haven assets in favor of holding cash, causing interest rates on Treasury bills with ... READ MORE >