Per NYP
US debt default chances this year have more than tripled
3/10/2023
Analysts at MSCI estimate that the probability of the US heading into debt default has over tripled this 2023. This comes as Congress has struggled to reach a new deal regarding its debt ceiling.
On February 24, the probability of a US debt default sat at 11.3% compared to 3.3% during early 2022. MSCI analysts said that compared to the debt ceiling battle in 2013, the risk of US debt default is now higher than at any point since then.
MSCI analyst: “The consequences of a potential default by the US government extend beyond the immediate impact on holders of Treasurys... Major market dislocation and a sharp slowdown in economic activity could both be realistic possibilities.”
In mid-January, the US debt ceiling was hit, and now Congress is still trying to agree on a potential bill that would help it avoid a debt default, per Business Insider. MSCI then gave a statement regarding the dangers of the lack of agreement.
MSCI: "In the absence of legislative agreement, CDS trading volume on the U.S. government may continue to strengthen as summer approaches, and the possibility of missing payments on U.S. Treasurys looms larger,"
In January, the US government reached its borrowing limit of $38.381 trillion. So far, "extraordinary measures" have been taken by the Treasury Department to allow the federal government to continue to operate.
Jamie Dimon, CEO of JPMorgan Chase, gave a statement regarding the importance of the situation. He noted that this matter should be taken seriously.
Dimon: “That is part of the financial structure of the world. This is not something we should be playing games with at all,”
The Congressional Budget Office has noted that the US could default on its debts between July and September should the debt ceiling not be raised by Congress. The agency believes that over the next 10 years, they believe that the deficit will total $18.8 trillion.
In June 2022, Russia hit debt default after missing two foreign-currency bonds.
See flow at unusualwhales.com/flow.
Other News:
- U.S. will default on its debt between July and September if Congress doesn’t raise debt ceiling
- Russia defaults on debt
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