Wall Street executives are reportedly preparing for the worst in regard to the looming United States debt ceiling deadline.
Citigroup chief executive Jane Fraser reveals the ongoing partisan debate is “more worrying” than arguments over previous debt ceiling deadlines, reports by Reuters.
United States Treasury Secretary Janet Yellen has warned that the United States will tumble into an “economic calamity” if Congress fails to raise the debt ceiling. She likewise projected that the Government could run out of cash by June 1st if the challenge isn’t dealt with.
Reuters reports that big bond investors are stressing the importance of liquidity to remain durable amid potential market volatility.
The Securities Industry and Financial Markets Association (SIFMA), a trade group for broker-dealers, financing banks and investment managers, is reportedly gaming out numerous routes the Government can potentially choose to go down in the event it runs out of cash, including one where the Treasury Department extends maturing securities by one day at a time.
Reuters reports would be “the most disruptive scenario” would be if the Treasury doesn’t offer extensions and fails to pay bonds.
Reveals Rob Toomey, SIFMA’s managing director and associate general counsel for financial resources markets,
“It is difficult because this is unprecedented but all we’re attempting to do is make sure we develop a strategy with our members to assist them navigate through what would be a disruptive situation.”
Negotiations betwixt House Republicans and the Biden Administration continued on Tuesday, though it remains unclear how close the opposing sides are to reaching a deal.
Generated Image: Midjourney