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NEW YORK/WASHINGTON, May 15 (Reuters) - As talks over raising the U.S. government's $31.4 trillion debt ceiling intensify, Wall Street banks and asset managers have begun preparing for fallout from a potential default. Citigroup (C.N) CEO Jane Fraser said this debate on the debt ceiling is "more worrying" than previous ones. U.S. government bonds underpin the global financial system so it is difficult to fully gauge the damage a default would create, but executives expect massive volatility across equity, debt and other markets. Banks, brokers and trading platforms are prepping for disruption to the Treasury market, as well as broader volatility. Bond trading platform Tradeweb said it was in discussions with clients, industry groups, and other market participants about contingency plans.

☆ The $31 trillion debt-ceiling fiasco could punish markets and it's complicating an already complex economic outlook
▼ + stars: | 2023-05-10 | by ( Phil Rosen | ) www.businessinsider.com time to read: +6 min

In any case, one outcome that many hold with a high degree of certainty is that financial markets are going to feel pain if the "x-date" bell tolls. This $31 trillion debt ceiling argument "comes at the worst possible time," according to Chicago Fed President Austan Goolsbee. "Many past instances of debt limit standoffs have been resolved without significant market fallout," the strategists wrote in a recent note. That's according to LPL chief global strategist Quincy Krosby — she says it boils down to these three reasons. With recession risks climbing, Bank of America analysts slashed their 2023 outlook for oil prices.

☆ A US debt default will have 'unquantifiable' adverse consequences and unthinkable long-term implications, Wall Street experts warn
▼ + stars: | 2023-05-10 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +3 min

A group of 17 top financial experts warned of "unquantifiable" consequences to come if the US defaults on its debt. In a letter addressed to Treasury Secretary Janet Yellen, they made the case for possibly repealing the debt limit altogether. The group warned that the ongoing political deadlock is particularly harmful in the midst of the banking turmoil. The Wall Street executives warned the spat is particularly harmful amid the ongoing turmoil in the banking sector. "With financial markets on edge, continuing to debate raising the debt limit is reckless and irresponsible."

☆ Biden, McCarthy aim to break US debt-ceiling standoff as default crisis looms
▼ + stars: | 2023-05-08 | by ( David Morgan | ) www.reuters.com time to read: +5 min

Analysts do not expect an immediate deal to avert a historic default, which the Treasury Department has warned could come as soon as June 1. Forecasters warn a default would likely send the U.S. economy into deep recession with soaring unemployment. Outside observers including people who have participated in past fiscal negotiations and business lobby groups have laid out a range of potential compromises largely revolving around extending the debt ceiling past the November 2024 presidential elections while freezing spending. But it is not catastrophic," Democratic Senator Chris Coons said, referring to past shutdowns, adding, "default would be catastrophic." Worries about the standoff have already started to weigh on financial markets, but a default would have a far more immediate effect on average Americans.

☆ Why Joe Biden Should Not Negotiate With Kevin McCarthy on the Debt Ceiling - The New York Times
▼ + stars: | 2023-05-08 | by ( Daniel Pfeiffer | ) www.nytimes.com time to read: +2 min

When President Biden meets with congressional leaders at the White House on Tuesday, he will most likely reiterate his position that Congress should pass a bill lifting the debt ceiling without negotiations or conditions. A poll from Echelon Insights showed that voters support the idea of negotiating over the debt limit. But from the perspective of someone who had a front-row seat inside the White House to the last two debt-limit standoffs between a Democratic president and a Republican House, Mr. Biden’s refusal to negotiate on the debt ceiling is the best strategy. The president must know that Mr. McCarthy is not a negotiating partner who can be trusted to deliver. The speaker’s fate is in the hands of representatives — including many House Freedom Caucus members — who have shown very little willingness for compromise or good-faith negotiation.

☆ Explainer: How the Fed might act in a U.S. default
▼ + stars: | 2023-05-02 | by ( ) www.reuters.com time to read: +6 min

Despite Powell's protestations, the Fed would have a role in trying to limit the harm to financial stability. In past debt-ceiling standoffs - in 2011 and 2013 - Fed staff and policymakers developed a playbook that would likely provide a starting point. English, however, had envisioned the bonds being accepted by the Fed at a market price that would likely be impaired by their defaulted status. But, following the bank failures in March, the Fed has a new bank lending facility - one that allows securities with impaired prices to be pledged at face value. Ben Bernanke, Fed chair at the time, quipped: "So you are willing to accept 'loathsome' under some certain circumstances," drawing laughter from others on the call.

☆ Analysis: Bank failures and looming debt default test American confidence in the economy
▼ + stars: | 2023-05-01 | by ( Zachary B. Wolf | ) edition.cnn.com time to read: +7 min

CNN —Two converging crises are testing American confidence in their financial well-being. And there’s a debt crisis, which is becoming more urgent as the US approaches the “X-date” – when it would default – and on which opposing lawmakers aren’t currently talking to each other. First Republic Bank was taken over by the Federal Deposit Insurance Corporation on Monday, and most of its assets were sold to JPMorgan Chase. Maintaining confidenceNone of that means this is a golden chapter for the American financial system. Now, the debt crisis and the X-dateIf only American lawmakers could take a cue from the First Republic saga and get into a room to solve the debt crisis.

☆ 5 reasons fighting Disney is a political winner for DeSantis — and 6 reasons it could hurt his shot at the presidency
▼ + stars: | 2023-04-28 | by ( Kimberly Leonard | ) www.businessinsider.com time to read: +13 min

It does a ton of business in China, which many GOP voters view as a threat to the US. DeSantis already ran on being anti-Disney — and wonTaryn Fenske, DeSantis' communications director, has described the Disney fight as being "the will of Florida voters." And they might not vote for DeSantis if they think the Disney fight is a killer in a general election. Families often work hard and save for years to take their children to Disney World. If DeSantis can't bring a resolution to the Disney fight, can he handle the job of president?

☆ US debt limit has seen 78 changes since 1960. This time is likely no different, says Bank of America's wealth management team
▼ + stars: | 2023-04-27 | by ( Zahra Tayeb | ) www.businessinsider.com time to read: +2 min

Lawmakers will ultimately reach an agreement preventing the US from defaulting on its debt, according to Merrill strategists. The debt ceiling has been changed 78 times since 1960 despite political deadlocks, and this time is "likely no different", they said. "Many past instances of debt limit standoffs have been resolved without significant market fallout," they said. Many past instances of debt limit standoffs have been resolved without significant market fallout," Merrill strategists wrote in a note. "Since 1960, 78 times over, Congress acted to either raise, temporarily extend, or revise the debt limit, with this time likely no different," they added.

☆ Analysis: Debt ceiling worries bubble up in US stock options market
▼ + stars: | 2023-04-26 | by ( Saqib Iqbal Ahmed | ) www.reuters.com time to read: +4 min

NEW YORK, April 26 (Reuters) - Worries over a debt ceiling showdown are creeping into U.S. options markets, as investors grow increasingly concerned that lawmakers will be unable to hammer out a deal in coming weeks, potentially sparking stock volatility as a key deadline nears. In the options market, however, worries are bubbling as some analysts warn the so-called X-date, after which the government is no longer able to pay all its bills, could come in the first half of June. U.S. Treasury Secretary Janet Yellen on Tuesday warned that failure by Congress to raise the government's debt ceiling - and the resulting default - would trigger an "economic catastrophe" that would send interest rates higher for years to come. AWKWARD TIMINGLegislative standoffs over debt limits this last decade have largely been resolved before they could ripple out into markets. "You are going to have all these fundamental pressures -- and then our friends in Washington aren't going to be able to agree on what to do with the debt ceiling," he said.

☆ Debt ceiling worries bubble up in US stock options market
▼ + stars: | 2023-04-26 | by ( Saqib Iqbal Ahmed | ) www.reuters.com time to read: +4 min

☆ Debt crisis is a scary white swan for US economy
▼ + stars: | 2023-04-25 | by ( Ben Winck | ) www.reuters.com time to read: +8 min

If Democrats and Republicans can’t agree to lift the government’s borrowing limit, the country could suffer an unprecedented and catastrophic default on its debt. The standoff over the debt ceiling is a white swan, or an entirely predictable, very frequent event that has the potential to be as catastrophic as its darker sibling. That is why, in all past scuffles over government borrowing, Congress ended up raising or suspending the debt ceiling. Uncertainty over the timing of the agreement led to the most volatile week for financial markets since the 2008 financial crisis. Failure to lift the debt ceiling soon can spark a vicious cycle of market anxiety, rising borrowing costs and bank stress.

REUTERS/Brendan McDermidNEW YORK, April 20 (Reuters) - A debt ceiling fight is looming in the U.S. yet again, giving investors another worry for markets this year. Here is a Q&A about the implications for markets:WHAT IS THE DEBT CEILING? The debt ceiling is the maximum amount the U.S. government can borrow to meet its financial obligations. Outstanding government debt, nominal gross domestic product and federal limit to borrowWHEN WILL THE U.S. HIT THE DEBT CEILING? Some Treasury bills (T-bills) are featuring a premium in their yields that may be tied to an elevated default risk, according to some analysts.

☆ Analysis: No China, no deal: Bid to break sovereign debt logjams gets weary thumbs up
▼ + stars: | 2023-04-13 | by ( Libgeorge Marc Jones | Marc Jones | ) www.reuters.com time to read: +6 min

LONDON, April 13 (Reuters) - The latest bid by the world's leading institutions and creditors to speed up debt restructurings and get bankrupt countries back on their feet has been greeted by a mix of cautious optimism and weary scepticism by veteran crisis watchers. The somewhat loose framework around sovereign restructurings has seen Beijing seek to influence the traditional rules of engagement in these processes. The Common Framework platform introduced by leading G20 nations in 2020 aimed to bring all creditors, including China, together and streamline negotiations. Anna Ashton, director of China research at Eurasia Group, said this week’s developments underscored the benefits for China to give some ground on some of its concerns. "China is a difficult partner to talk to but we need China at the table for the solution of debt problems, because otherwise we won't see any progress," Lindner said.

☆ No China, no deal: Bid to break sovereign debt logjams gets weary thumbs up
▼ + stars: | 2023-04-13 | by ( Libgeorge Marc Jones | Marc Jones | ) www.reuters.com time to read: +6 min

☆ Explainer: How are money market funds preparing for a potential debt ceiling crisis?
▼ + stars: | 2023-04-06 | by ( John Mccrank | ) www.reuters.com time to read: +5 min

HOW BIG ARE MONEY MARKET FUNDS? Assets under management in U.S. money market funds, which include Treasury-only funds, prime funds, and government funds, totaled a record $5.2 trillion as of March 29, Investment Company Institute data showed. WHY IS THE DEBT CEILING A CONCERN FOR MONEY MARKET FUNDS? Fitch Ratings warned in February that the potential for investor redemptions and volatility in Treasury-only money market funds – as opposed to prime and government money market funds, which have other sources of funding – would rise if investors believed the government were to default. Runs on money market funds have been rare.

☆ Kansas legislature passes bill to ban transgender athletes from girls' sports
▼ + stars: | 2023-03-10 | by ( ) www.reuters.com time to read: +2 min

[1/2] Transgender rights activist waves a transgender flag at a rally in Washington Square Park in New York, U.S., May 24, 2019. REUTERS/Demetrius FreemanMarch 9 (Reuters) - Kansas' Republican-led legislature on Thursday passed a bill that would ban transgender athletes from playing girls or women's school sports if they were born male. Kansas Governor Laura Kelly, a Democrat, is expected to veto the bill, as she vetoed two similar measures in the previous two years. Opponents and LGBTQ advocates say the laws are unnecessary, given the small number of transgender athletes in school sports. At least 18 states have passed or enacted legislation preventing transgender students from playing on school sports teams matching their gender identity.

☆ Debt default would be ‘catastrophic’ event that could kill millions of American jobs, Moody’s warns
▼ + stars: | 2023-03-07 | by ( Matt Egan | ) edition.cnn.com time to read: +3 min

New York CNN —A breach of the US debt ceiling risks sparking a 2008-style economic catastrophe that wipes out millions of jobs and sets America back for generations, Moody’s Analytics warned on Tuesday. “A default would be a catastrophic blow to the already fragile economy,” Zandi said in prepared remarks to be delivered during a Senate subcommittee hearing on Tuesday. Citing concerns about America’s mountain of debt, Republicans have called for steep cuts to federal spending in exchange for raising the debt ceiling. Given the enormous stakes, Moody’s Analytics urged lawmakers to avoid playing chicken with US debt. “Lawmakers should put an end to the wrangling over the debt limit and increase it with no strings attached so future generations can enjoy the same benefits,” Zandi said in his prepared remarks.

☆ Minting a $1 trillion coin may be legal but is an 'unworkable' option to avoid a catastrophic US debt default, Moody's Analytics chief economist says
▼ + stars: | 2023-03-07 | by ( Filip De Mott | ) www.businessinsider.com time to read: +4 min

Mark Zandi said a $1 trillion coin may be legal but is an unrealistic fix to the debt crisis. The law authorizing platinum coins had commemorative coins in mind, the Moody's chief economist said. "Proposed workarounds to the debt limit, like minting a $1 trillion platinum coin, would be unworkable," he wrote. His written remarks echo those of Treasury Secretary Janet Yellen, who previously dismissed the idea of a $1 trillion coin. Meanwhile, the Treasury has already reached the $31.4 trillion debt limit, and is able to use extraordinary measures to continue meeting its obligations.

The U.S. Treasury hit its $31.4 trillion borrowing limit last month. Investors need to actively manage their positions during a prolonged turbulent period in which borrowing negotiations could disrupt markets, Shah said. The Treasury bills yield curve indicates investors are demanding higher returns to hold debt due in August, signaling that it is perceived to be riskier than other maturities. Bid yields of Treasury billsStandoffs over the debt limit in the last decade have largely been resolved without causing major financial turmoil. Bond investors are navigating uncertainty around what they're calling the X-date, when the government can no longer meet its payments.

☆ Factbox: The U.S. debt ceiling and markets: Gauging the fallout
▼ + stars: | 2023-02-16 | by ( ) www.reuters.com time to read: +3 min

NEW YORK, Feb 16 (Reuters) - U.S. President Joe Biden is at odds with Republicans in Congress over raising the $31.4 trillion debt ceiling, a showdown that looms as a risk factor for markets. Many past debt-limit standoffs have been resolved without significant market fallout but that hasn't always been the case: a 2011 debt ceiling showdown roiled markets and led to a downgrade Standard & Poor's. Here is some background about the debt ceiling debate and its impact on markets:** Though months remain for lawmakers to reach an agreement, there are signs stock investors may already be pricing in risk around the debt ceiling debate. According to Goldman Sachs, while debt limit debates typically have had "limited" impact on the broad market, stocks exposed to government spending have commonly lagged in the weeks prior to the debt ceiling deadline. That led Deutsche Bank's head of global economics and thematic research Jim Reid to note that markets might be caught off guard by major fallout from a debt showdown.

☆ Congressional Budget Office to issue debt limit, budget forecasts on Feb. 15
▼ + stars: | 2023-01-25 | by ( David Lawder | ) www.reuters.com time to read: +2 min

WASHINGTON, Jan 25 (Reuters) - The Congressional Budget Office (CBO) said on Wednesday that it plans to release its 2023 baseline budget and economic forecast on Feb. 15, along with a special report on the federal debt limit situation. The non-partisan CBO said the debt limit report, part of a recurring series during debt limit standoffs in Congress, will describe "the current debt situation and CBO's expectation about when the Treasury will no longer be able to pay its obligations fully if the debt limit is not raised." The agency annually provides the baseline fiscal forecast based on current tax and spending laws and its assessment of current economic conditions to kick off Congress' budgeting and appropriations processes. The U.S. budget deficit for December quadrupled from a year earlier to $85 billion as revenues eased and outlays for debt interest costs, health care and Social Security grew. RReporting by David Lawder; Editing by Christopher CushingOur Standards: The Thomson Reuters Trust Principles.

☆ Explainer: A looming U.S. debt ceiling fight is starting to worry investors
▼ + stars: | 2023-01-19 | by ( ) www.reuters.com time to read: +5 min

Here is a Q&A about the implications for markets:WHAT IS THE DEBT CEILING? The debt ceiling is the maximum amount the U.S. government can borrow to meet its financial obligations. Outstanding government debt, nominal gross domestic product and federal limit to borrowWHEN WILL THE UNITED STATES HIT THE DEBT CEILING? Goldman Sachs estimated the debt ceiling would be reached between August and October. Declining as debt ceiling loomsDO BOND PRICES REFLECT U.S.

"I think that this is going to be the most contentious debt ceiling debate in memory," Winograd said. "It would suggest that there's some type of premium being allocated to bills in that space where the risk of the debt ceiling starts to grow," Norris said. Some investors also believe lawmakers will be able to reach a deal on raising the debt ceiling without severely unsettling markets. Edward Al Hussainy, senior interest rate and currency analyst at Columbia Threadneedle, thinks any debt ceiling tensions would eventually be resolved, calling the issue "a well rehearsed storyline." However, the heightened concerns about the debt ceiling are "an extra little justification on top" for the firm's positioning, Pride said.

☆ Justice Department Probes to Come Under Congressional Investigation
▼ + stars: | 2023-01-10 | by ( C. Ryan Barber | ) www.wsj.com time to read: 1 min

Rep. Jim Jordan is expected to lead the subcommittee while also serving as chair of the Judiciary Committee itself. WASHINGTON—House Republicans are preparing for an expansive investigation into federal law enforcement, setting the stage for standoffs with the Biden administration over access to information about some of the Justice Department’s continuing criminal inquiries, including its scrutiny of former President Donald Trump. Days after ending a drawn-out speaker election, House lawmakers are expected to vote as soon as Tuesday on a resolution creating a panel within the Judiciary Committee focused on what Republicans have termed the “weaponization of the federal government.” Rep. Jim Jordan , an Ohio Republican and close ally of Mr. Trump, is expected to lead the subcommittee while also serving as chair of the Judiciary Committee itself.

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