- Treasury Secretary Janet Yellen said Friday that the U.S. likely has enough reserves to postpone a possible default until June 5.
- So-called “X dates” updates can buy negotiators time to reach an agreement. Yellen has previously said the United States could run out of money to make payments by June 1.
- The market closed higher on Friday, partly on optimism that a deal could be passed by Congress and signed by the president by the deadline.
WASHINGTON–Treasury Secretary Janet Yellen said on Friday that the United States likely has enough reserves to postpone a possible default until June 5.
“We estimate that unless Congress raises or suspends the debt ceiling by June 5, the Treasury Department will not have the funds to meet its government obligations,” Yellen said. in the letter Speaker of the House Kevin McCarthy.
A new date on Friday gave us some much-needed breathing room. negotiation The White House and Republicans in Congress appeared to be close to reaching a compromise deal for a raise on Friday. debt ceiling 2 years.
The so-called “X-Date” was last renewed on May 1, with Speaker Yellen telling Congress that the United States will have enough time to meet its obligations “in early June, or as early as June 1.” I said I have cash.
Friday’s letter marked the first time since Yellen began sending regular updates to Congress in January that the secretary didn’t warn of a date with phrases such as “as soon as possible.”
Instead, Yellen said the Treasury Department would pay “more than $130 billion of payments scheduled for the first two days of June,” leaving the Treasury Department with “extremely low levels of resources.” explained.
“In the week of June 5th, the Treasury will make an estimated $92 billion in payments and transfers,” Yellen added, adding that “our projected resources are not sufficient to meet all of these obligations.” Enough,” he continued.
To highlight how Treasury reserves are dwindling, Yellen said on Thursday the Treasury took the vague step of transferring $2 billion from the Civil Servants Retirement Fund to the Federal Bank, the government’s main lender. He said he had no choice but to teach.
Yellen wrote that the measure was necessary because “remaining resources are at such low levels that all available extraordinary measures must be exhausted to avoid failing to meet all government commitments”. ing.
market closed higher Friday was driven in part by optimism that the deal would be passed by the House and Senate and signed by the president by June 1.
But optimism that a deal will be reached by Friday has faded as talks dragged on this week with only vague claims of “progress” by officials.
Officials said Friday was widely seen as the last day a deal could be reached, and had until June 1, the last “X date,” to draft a bill, pass it in the House, and He said the Senate still has plenty of time to pass it.
Yellen’s new date comes amid mounting global concerns about the US credit rating.
On Wednesday, the Fitch credit rating agency gave the U.S. triple-A status. “The watch has a negative rating.”
at a preliminary meeting of the International Monetary Fund on Friday annual evaluation “The brinkmanship over the federal debt ceiling could create further systemic risks to both the U.S. and global economies that are entirely avoidable,” U.S. officials wrote.
If the U.S. were to effectively default, even for a few days, interest rates could rise and undermine confidence in the U.S. dollar. Economists say US adversaries, especially Russia and China, are happy to watch the current confrontation over debt limits, reassuring to know that declining confidence in the US dollar is to their advantage. ing.