• Wall Street executives are reportedly preparing for a potential US debt default and related economic consequences, including a collapse in the mortgage and stock markets.
• U.S. Treasury Secretary Janet Yellen warned that the US could go into an “economic calamity” if Congress fails to raise the debt ceiling by June 1st.
• Big bond investors are stressing the importance of liquidity amid potential market volatility, while SIFMA is reportedly gaming out multiple routes with its members to help them navigate through a disruptive situation.
Wall Street Execs Bracing for US Debt Default
Wall Street executives are reportedly bracing for a potential US debt default, which may result in a collapse in the mortgage and stock markets according to Reuters. U.S. Treasury Secretary Janet Yellen has warned that if Congress fails to raise the debt ceiling by June 1st, it could lead to an „economic calamity“.
Liquidity Stress Growing Among Bond Investors
Big bond investors have also acknowledged the need for increased liquidity amidst growing market volatility due to concerns about a possible default on US debt obligations. The Securities Industry and Financial Markets Association (SIFMA) is reportedly gaming out multiple scenarios with its members in order to help them navigate through any disruption resulting from a cash-strapped government.
Yellen Urging Congressional Action Before June 1st Deadline
U.S Treasury Secretary Janet Yellen has been urging Congress to take action before the looming June 1st deadline in order to prevent an economic disaster from occurring due to an inability of the government’s ability repay its debts on time. As negotiations between House Republicans and President Biden continue, it remains unclear how close they are towards reaching an agreement on this issue yet or not.
Rob Toomey On Unprecedented Situation
Rob Toomey, SIFMA’s managing director and associate general counsel for capital markets, commented on this unprecedented situation saying: “It is difficult because this is unprecedented but all we’re trying to do is make sure we develop a plan with our members to help them navigate through what would be a disruptive situation.“
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