{"id":42290,"date":"2023-01-15T22:29:52","date_gmt":"2023-01-15T22:29:52","guid":{"rendered":"http:\/\/www.brandon.ddtest.info\/multisite-test\/u-s-debt-default-likely-in-second-half-of-2023-bank-of-america\/"},"modified":"2023-01-15T22:29:52","modified_gmt":"2023-01-15T22:29:52","slug":"u-s-debt-default-likely-in-second-half-of-2023-bank-of-america","status":"publish","type":"post","link":"http:\/\/www.brandon.ddtest.info\/multisite-test\/u-s-debt-default-likely-in-second-half-of-2023-bank-of-america\/","title":{"rendered":"U.S. Debt Default &#8216;Likely&#8217; in Second Half of 2023: Bank of America"},"content":{"rendered":"<p> \n<\/p>\n<div>\n<p>Many investors are concerned that with the far-right wing of the Republican Party holding sway in the House of Representatives, a <a href=\"https:\/\/www.thestreet.com\/investing\/house-speaker-fight-debt-ceiling\">debt default is coming<\/a>.<\/p>\n<p>If the view of Ralph Axel, rates strategist at Bank of America, is correct, they have good reason to be concerned.<\/p>\n<p>\u201cWe think it is likely that by late summer or early fall, the federal government will temporarily be forced to default on a portion of its daily obligations for a time ranging between a couple of days to a few weeks,\u201d he wrote in a commentary.<\/p>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-b not-size-c\" data-ad-group=\"in_content-0\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-b not-size-d\" data-ad-group=\"in_content-0\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-c not-size-d\" data-ad-group=\"in_content-0\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-b not-size-c not-size-d\" data-ad-group=\"in_content-0\"\/>\n<p>\u201cIf so, this would represent the first time in history that the U.S. would default on any of its obligations due to the debt ceiling law. We think such an event would include a fall in equity and bond prices, potentially testing Treasury market functioning and <a href=\"https:\/\/www.thestreet.com\/dictionary\/l\/liquidity-market-liquidity\">liquidity<\/a>.\u201d<\/p>\n<p>That may be an understatement. It wouldn\u2019t be surprising if investors absolutely freaked out, dumping assets by the bucketful. <\/p>\n<p>\u201cPotentially testing Treasury market functioning and liquidity\u201d may sound technical and anodyne. But it\u2019s possible the Treasury market would temporarily collapse.<\/p>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-b not-size-c\" data-ad-group=\"in_content-1\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-b not-size-d\" data-ad-group=\"in_content-1\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-c not-size-d\" data-ad-group=\"in_content-1\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-b not-size-c not-size-d\" data-ad-group=\"in_content-1\"\/>\n<h2 id=\"axel-foresees-treasury-payment-prioritization-plan\">Axel Foresees Treasury Payment Prioritization Plan<\/h2>\n<p>Still, \u201cwe would expect Treasury to quickly announce a payment prioritization plan which should protect debt from any defaults and calm markets,\u201d Axel said. That certainly sounds reasonable. Investors have to hope he&#8217;s right.<\/p>\n<p>\u201cWe think any decline in asset prices entering into a default would be a buying opportunity, as the debt ceiling would eventually be raised,\u201d he said. <\/p>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-b not-size-c\" data-ad-group=\"in_content-2\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-b not-size-d\" data-ad-group=\"in_content-2\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-c not-size-d\" data-ad-group=\"in_content-2\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-b not-size-c not-size-d\" data-ad-group=\"in_content-2\"\/>\n<p>\u201cAnd the economic damage done from operating the government in default would be minimal on an aggregate basis if it is relatively short-lived.\u201d\u00a0<\/p>\n<p>Again, that sounds plausible, and with any luck, Axel is right. But there&#8217;s no guarantee with political extremists running amok. <\/p>\n<p>In theory, it shouldn\u2019t be difficult to cobble a coalition of nearly all the Democrats along with a few Republicans to raise the government debt ceiling.<\/p>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-b not-size-c\" data-ad-group=\"in_content-3\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-b not-size-d\" data-ad-group=\"in_content-3\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-c not-size-d\" data-ad-group=\"in_content-3\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-b not-size-c not-size-d\" data-ad-group=\"in_content-3\"\/>\n<h2 id=\"gop-collaborators-might-face-resistance\">GOP Collaborators Might Face Resistance<\/h2>\n<p>But any Republican joining that effort might be subject to a primary challenge from someone on the extreme right. And it could be worse: Those Republicans could be targeted for physical violence.<\/p>\n<p>Axe says that \u201cmarketable Treasury debt would likely not experience any defaults at all, and this would be key to an orderly restoration of markets after the initial shock fades,\u201d he said. <\/p>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-b not-size-c\" data-ad-group=\"in_content-4\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-b not-size-d\" data-ad-group=\"in_content-4\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-c not-size-d\" data-ad-group=\"in_content-4\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-b not-size-c not-size-d\" data-ad-group=\"in_content-4\"\/>\n<p>\u201cThe total cost of marketable debt is not only small relative to other government obligations. But it would likely be prioritized over all other payments in the Treasury payment system.\u201d <\/p>\n<p>Further, \u201cwe would expect the Treasury Department to announce a prioritization plan before entering the default zone,\u201d Axel said.<\/p>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-c not-size-d\" data-ad-group=\"in_content-5\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-b not-size-c not-size-d\" data-ad-group=\"in_content-5\"\/>\n<h2 id=\"yellen-debt-to-hit-current-limit-on-jan-19\">Yellen: Debt to Hit Current Limit on Jan. 19<\/h2>\n<p>Treasury Secretary Janet Yellen wrote a letter to Congress Jan. 13, announcing that beginning Jan. 19, &#8220;the outstanding debt of the United States is projected to reach the statutory limit.&#8221;<\/p>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-b not-size-c\" data-ad-group=\"in_content-5\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-b not-size-d\" data-ad-group=\"in_content-5\"\/>\n<p>Further, &#8220;once the limit is reached, Treasury will need to start taking certain extraordinary measures to prevent the U.S. from defaulting on its obligations,&#8221; she said.<\/p>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-a not-size-c not-size-d\" data-ad-group=\"in_content-6\"\/>\n<aside class=\"m-in-content-ad-row l-inline mm-in-content-ad-row--in-content not-size-b not-size-c not-size-d\" data-ad-group=\"in_content-6\"\/>\n<p>&#8220;The period of time that extraordinary measures may last is subject to considerable uncertainty,&#8221; Yellen said.<\/p>\n<p>&#8220;It is unlikely that cash and extraordinary measures will be exhausted before early June&#8230;.\u00a0I respectfully urge Congress to act promptly to protect the full faith and credit of the United States.&#8221;<\/p>\n<\/div>\n<p><script type=\"text\/template\" id=\"facebookPixel135067773744716\">!function(f,b,e,v,n,t,s){if(f.fbq)return;n=f.fbq=function()\n{n.callMethod? n.callMethod.apply(n,arguments):n.queue.push(arguments)}\n;if(!f._fbq)f._fbq=n;\nn.push=n;n.loaded=!0;n.version='2.0';n.queue=[];t=b.createElement(e);t.async=!0;\nt.src=v;s=b.getElementsByTagName(e)[0];s.parentNode.insertBefore(t,s)}(window,\ndocument,'script','https:\/\/connect.facebook.net\/en_US\/fbevents.js');\n(function(){\n    fbq('init', '135067773744716');\n    fbq('track', 'PageView');\n    var contentId = 'ci02b545a1800026e2';\n    if (contentId !== '') {\n        fbq('track', 'ViewContent', {content_ids: [contentId], content_type: 'product'});\n    }\n})();<\/script><br \/>\n<br \/>\n<br \/><a href=\"https:\/\/news.google.com\/__i\/rss\/rd\/articles\/CBMiYGh0dHBzOi8vd3d3LnRoZXN0cmVldC5jb20vbWFya2V0cy91LXMtZGVidC1kZWZhdWx0LWxpa2VseS1pbi1zZWNvbmQtaGFsZi1vZi0yMDIzLWJhbmstb2YtYW1lcmljYdIBZWh0dHBzOi8vd3d3LnRoZXN0cmVldC5jb20vLmFtcC9tYXJrZXRzL3Utcy1kZWJ0LWRlZmF1bHQtbGlrZWx5LWluLXNlY29uZC1oYWxmLW9mLTIwMjMtYmFuay1vZi1hbWVyaWNh?oc=5\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Many investors are concerned that with the far-right wing of the Republican Party holding sway in the House of Representatives, a debt default is coming. If the view of Ralph Axel, rates strategist at Bank of America, is correct, they have good reason to be concerned. \u201cWe think it is likely that by late summer &hellip;<\/p>\n","protected":false},"author":1,"featured_media":42291,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[161],"tags":[],"_links":{"self":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts\/42290"}],"collection":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/comments?post=42290"}],"version-history":[{"count":0,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts\/42290\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/media\/42291"}],"wp:attachment":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/media?parent=42290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/categories?post=42290"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/tags?post=42290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}