{"id":1917130,"date":"2023-04-20T09:55:33","date_gmt":"2023-04-20T13:55:33","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/risk-of-debt-default-is-non-trivial-warns-jpmorgan\/"},"modified":"2023-04-20T10:03:08","modified_gmt":"2023-04-20T14:03:08","slug":"risk-of-debt-default-is-non-trivial-warns-jpmorgan","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/risk-of-debt-default-is-non-trivial-warns-jpmorgan\/","title":{"rendered":"Risk of Debt Default Is \u2018Non-Trivial,\u2019 Warns JPMorgan"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">16<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Frisk-of-debt-default-is-non-trivial-warns-jpmorgan%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1917130&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div class=\"post_content\">\n<div class=\"aplayer_app\" data-source=\"https:\/\/vs1.youmaker.com\/assets\/2023\/0420\/88d3ada8-37f9-41d0-ade9-1036da068718\/audio.mp3?length=5389389&#038;duration=449\"><\/div>\n<\/p>\n<p>JPMorgan has warned that there\u2019s a \u201cnon-trivial risk\u201d of a default on U.S. government obligations as the debt-limit deadline looms with no agreement in sight.<\/p>\n<p>Analysts at the bank said in the Wednesday note that they expect the debate over the debt ceiling as well as the one on the federal funding bill to come \u201cdangerously close\u201d to their respective deadlines.<\/p>\n<p>The United States reached its $31.4 trillion debt ceiling in January, leaving it to a politically divided Congress to raise the cap and allow the government to keep paying its bills.<\/p>\n<p>Democrats have insisted on a bill with no preconditions to raise the debt ceiling, while Republicans have demanded spending cuts in exchange for their support to lift the borrowing cap.<\/p>\n<h2>X-Date<\/h2>\n<p>The Treasury Department has, since the January breach of the debt cap, resorted to so-called \u201cextraordinary measures\u201d to keep making payments on outstanding federal debt obligations and keep the government from defaulting, but these will run out at some point.<\/p>\n<p>The federal government could reach the moment when it will no longer be able to meet its financial obligations\u2014known as the X-date\u2014as early as June 5, according to a January letter (<a href=\"https:\/\/home.treasury.gov\/system\/files\/136\/Debt-Limit-Letter-to-Congress-20230119-McCarthy.pdf\">pdf<\/a>) to lawmakers from Treasury Secretary Janet Yellen.<\/p>\n<p>When the X-date is reached and there\u2019s no agreement to lift the debt cap, Treasury will be unable to issue any more bills, bonds, or notes. It could only make payments on its debt obligations from tax revenues.<\/p>\n<p>Yellen is expected in the next few days to revise the X-date, which analysts have generally put at a later date than June 5, seeing it as a worst-case scenario that she presented to lawmakers in her January letter.<\/p>\n<figure id=\"attachment_5130675\" style=\"width: 640px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2023\/03\/17\/Yellen-GettyImages-1473959945-1200x800.jpg\"><figcaption class=\"wp-caption-text\"><noscript><\/noscript><\/figcaption><\/a> Treasury Secretary Janet Yellen testifies about the Biden administration\u2019s Fiscal Year 2024 federal budget proposal before the Senate Finance Committee in the Dirksen Senate Office Building on Capitol Hill in Washington, on March 16, 2023. (Chip Somodevilla\/Getty Images)<\/figure>\n<p>The nonpartisan Congressional Budget Office (CBO) <a href=\"https:\/\/www.cbo.gov\/publication\/58906\">has projected<\/a> that the X-date would fall at some point between July and September, while investment bank Goldman Sachs expects it will come at some point in June.<\/p>\n<p>JPMorgan analysts said in the note Wednesday that they see the X-date coming in the middle of August.<\/p>\n<p>\u201cSigns of stress typically start in the T-bill market two to three months before the X-date given money market funds, which are large holders of T-bills, will begin to more actively advertise that they don\u2019t hold any bills that mature over those dates,\u201d JPMorgan analysts said in the note.<\/p>\n<p>Markets have already started showing early signs that investors are stressed about a possible debt default. On Thursday, jitters over the debt ceiling deadlock in Washington sent the cost of insuring exposure to U.S. government debt to its highest level in over a decade.<\/p>\n<p>Spreads on U.S. five-year credit default swaps, which are market-based measures of default risk, widened to 49 basis points, according to S&#038;P Global Market Intelligence data. That\u2019s more than twice the level the swaps stood at in January.<\/p>\n<h2>\u2018Bumble Into the First Default\u2019<\/h2>\n<p>Both Democrats and Republicans have warned that failure to meet the country\u2019s debt obligation would be disastrous for the economy. Yet while Republicans have pushed for Democrat commitments to cut spending in exchange for agreeing to lift the borrowing cap, President Joe Biden has so far insisted on a clean bill to raise it.<\/p>\n<p>Biden said that he\u2019s prepared to consider GOP proposals for spending cuts as part of a budget plan, but that such discussions must be separate from \u201cprompt action on the Congress\u2019s basic obligation to pay the nation\u2019s bills an avoid economic catastrophe,\u201d according to a letter from the president to House Speaker Kevin McCarthy (R-Calif.).<\/p>\n<p>McCarthy said Monday in a speech at the New York Stock Exchange that unless Biden negotiates with Republicans to raise the debt cap, he would \u201cbumble into the first default.\u201d<\/p>\n<figure id=\"attachment_5207930\" style=\"width: 640px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2023\/04\/19\/id5207930-Biden_Maryland-1200x800.jpg\"><figcaption class=\"wp-caption-text\"><noscript><\/noscript><\/figcaption><\/a> President Joe Biden delivers remarks on the economy at an International Union of Operating Engineers Local 77 union training facility in Accokeek, Md., on April 19, 2023. (Nathan Howard\/Getty Images)<\/figure>\n<p>Rather than negotiate with the GOP on spending cuts as part of raising the debt ceiling, Biden and his Democrat allies in Congress have demanded that Republicans make their spending-cut proposals public.<\/p>\n<p>On Wednesday, House Republicans did just that,\u00a0<a href=\"https:\/\/www.theepochtimes.com\/house-gop-unveils-debt-limit-bill-proposes-1-5-trillion-debt-ceiling-increase_5206496.html\">introducing legislation<\/a> to raise the debt ceiling by $1.5 trillion, or until March 31, 2024, whichever comes first.<\/p>\n<p>Called the\u00a0<a href=\"https:\/\/www.documentcloud.org\/documents\/23783980-lsga_xml?responsive=1&#038;title=1\" target=\"_blank\" rel=\"noopener\">Limit, Save, Grow Act of 2023,<\/a>\u00a0the 320-page bill calls for returning discretionary spending to 2022 levels, capping spending growth to 1 percent per year, and repealing certain tax credits. It would also cancel Biden\u2019s student loan forgiveness program, take back unspent COVID-19 relief funds, remove barriers to increased domestic energy production, and reimpose work requirements for some participants in the food stamp program.<\/p>\n<p>\u201cIf Washington wants to spend more, it will have to come together and find savings elsewhere, just like every household in America,\u201d McCarthy said on the House floor.<\/p>\n<p>\u201cPresident Biden has a choice. Come to the table and stop playing partisan political games, or cover his ears, refuse to negotiate, and risk bumbling his way into the first default in our nation\u2019s history.\u201d<\/p>\n<figure id=\"attachment_5162197\" style=\"width: 640px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2023\/03\/31\/id5162197-GettyImages-1411639795-1200x800.jpg\"><figcaption class=\"wp-caption-text\"><noscript><\/noscript><\/figcaption><\/a> Rep. Kevin McCarthy (R-Calif.) answers questions during a press conference at the U.S. Capitol in Washington, on July 29, 2022. (Win McNamee\/Getty Images)<\/figure>\n<h2>\u2018Blueprint to Devastate\u2019?<\/h2>\n<p>Biden criticized McCarthy\u2019s announcement during a <a href=\"https:\/\/www.whitehouse.gov\/briefing-room\/speeches-remarks\/2023\/04\/20\/remarks-by-president-biden-on-his-vision-for-the-economy\/\">Wednesday speech<\/a> on the economy in Maryland, calling the Republican bill \u201cnot a <\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>JPMorgan has warned that there\u2019s a \u201cnon-trivial risk\u201d of a default on U.S. government obligations as the debt-limit deadline looms with no agreement in sight. Analysts at the bank said in the Wednesday note that they expect the debate over the debt ceiling as well as the one on the federal funding bill to come<\/p>\n","protected":false},"author":118,"featured_media":1917131,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[543],"tags":[24734,5487,15651,12519,7514,3633],"class_list":["post-1917130","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-epoch-times","tag-non-trivial","tag-debt","tag-default","tag-jpmorgan","tag-risk","tag-warns"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1917130","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/118"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1917130"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1917130\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1917131"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1917130"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1917130"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1917130"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}