US Treasury Secretary Yellen: June 1 remains a “hard deadline” for raising the Federal debt limit
“US Treasury Secretary Janet Yellen on Sunday said June 1 remains a “hard deadline” for raising the federal debt limit, with the odds quite low that the government will collect enough revenue to bridge to June 15, when more tax receipts are due,” reported Reuters.
It’s worth noting that US Treasury Secretary Yellen spoke on NBC’s “Meet the Press” program during the weekend while delivering the aforementioned comments.
Key quotes
There would be hard choices to make about payments to Americans if Congress failed to raise the $31.4 trillion debt ceiling before Treasury ran out of cash and was forced to default.
I indicated in my last letter to Congress that we expect to be unable to pay all of our bills in early June and possibly as soon as June 1.
And I will continue to update Congress, but I certainly haven’t changed my assessment.
So I think that that’s a hard deadline.
There’s always uncertainty about tax receipts and spending, and so it’s hard to be absolutely certain about this, but my assessment is that the odds of reaching June 15 while being able to pay all of our bills is quite low.
Invoking the amendment “doesn’t seem like something that could be appropriately used in these circumstances, given the legal uncertainty around it, and given the tight time frame we’re on.
Market implications
The news seems to have weighed on the market’s risk appetite, especially after US policymakers failed to offer any positive news during their weekend talks about stretching the debt ceiling. However, the US Dollar struggles to cheer the sour sentiment amid recent challenges to the hawkish Fed bets, especially after Chairman Jerome Powell’s mixed comments.