In our CIO Special, 'U.S. Debt Ceiling: Taking it to the limit', we explain the risks and likely outcome of the debate over the country's ability to borrow more money and make good on its debts.
We highlight the following:
- The U.S. Treasury confirms that its inability to meet financial obligations, known as the X-date, will be reached in early June - possibly even as early as June 1.
- Recent comments from President Biden and Congressional leaders of both parties fueling hopes a timely agreement may be reached to avert an imminent default.
- Though not our base case, in the absence of any traditional negotiated resolution a downgrade of U.S. Treasuries or even a default cannot be ruled out which would likely lead to a severe crisis on global capital markets.