Janet Yellen: ‘we simply have to raise the debt ceiling’

on May 24, 2023
  • Janet Yellen reiterates the risk of a U.S. debt default in early June.
  • Negotiations on debt ceiling resumed in the Capitol today.
  • S&P 500 index is currently up nearly 8.0% versus the start of 2023.

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S&P 500 is trending down this morning on fears that the United States could end up in a first-ever debt default in the coming days.

Here’s what Janet Yellen said today

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On Wednesday, the U.S. Treasury Secretary Janet Yellen reiterated at a Wall Street Journal event that it was “highly likely” to run out of cash in early June and said:

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I’m seeing stress in financial markets, including bill auctions. Even in run-up to possible default, there will be substantial financial market distress. We simply have to raise the debt ceiling.

Yellen has repeatedly warned of an economic catastrophe in recent weeks if the U.S. does not raise its debt ceiling. The stress, she said today, spoke volumes to the importance of reaching a timely agreement on that front.

The benchmark S&P 500 index is up nearly 8.0% versus the start of the year at writing.

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Negotiations on debt ceiling hit a ‘speed bump’

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Meanwhile, negotiations on debt ceiling resumed in the Capitol this morning. Republicans are adamant on not allowing an increase in the country’s borrowing limit unless President Biden pledges to cut spending.

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Negotiations, therefore, have hit a “speed bump” as the two parties remain miles apart, as per a Democratic official who spoke to NBC News on Wednesday. On CNBC’s “Street Signs Europe”, Barclays’ Julien Lafargue said today:

As people get more excited about the potential for a deal, you risk to see some upsets such as the one that we had basically yesterday and a few days before that as the deal is not reached just yet.

Here’s how the U.S. dollar might respond to a debt default.

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