Investors are slowly starting to turn away from US Treasuries, which are considered one of the safest in the world. All because of the specter of technical insolvency, which looks the United States more and more in the eye and would be an earthquake for the global economy. However, there is still a long way to panic.
On Tuesday, Reuters points out that the US economic situation is becoming increasingly difficult. The U.S. Treasury Department last month reached its debt limit of $31.4 trillion, bringing it significantly closer to its absolute maximum.
If Congress does not agree to raise this limit, the United States will not be able to pay its debts. We are talking here, among others about the purchase of treasury bonds, which are considered to be one of the safest in the world. Economists point out that in the absence of a response from Congress, a crisis could come this summer.
This is why a large proportion of investors turn away from these securities to avoid losses during a period when the government may exhaust its ability to pay its bills. Reuters writes that such a situation is still considered unlikely, but potentially very dangerous for the markets.
Representatives of the largest funds openly say that they advise their clients against investing in 6-month bonds.

Treasury Secretary Janet Yellen had already warned in January that the debt limit was approaching . “Failure to meet government commitments would cause irreparable damage to the U.S. economy, the livelihoods of all Americans, and global financial stability,” Yellen wrote in a letter to House Speaker Kevin McCarthy.
It is Congress that can raise the debt limit and solve the problem quite easily. President Joe Biden also appealed to lawmakers on this issue.
It is worth noting, however, that this is not the first time the US has faced insolvency. At the end of 2021, the situation was similar, and the disaster was avoided at the last minute. There are many indications that this time it may be similar.

Businessinsider

Tags：Biden economy, debt ceiling