The new X date is June 5, according to the Treasury
WASHINGTON — Treasury Secretary Janet Yellen said Friday that the United States is likely to have enough reserves to push back a possible default until June 5.
“We now estimate that the Treasury will not have sufficient resources to meet the government’s obligations unless Congress raises or suspends the debt ceiling by June 5,” Yellen wrote in a letter to the Speaker of the House, Kevin McCarthy.
Friday’s new date provided much-needed leeway for negotiations between the White House and congressional Republicans that appeared to be closing in on a compromise deal on Friday to raise the debt ceiling for two years.
The last time the so-called “X date” was updated was May 1, when Yellen told Congress that the United States had enough cash to meet its obligations through “the beginning of June, and potentially as early as June 1st. The letter marked the first time since Yellen began sending regular updates to Congress in February that the secretary has not warned the date with a phrase like “as soon as.”
Instead, Yellen explained that the Treasury would make more “$130 billion in scheduled payments in the first two days of June,” leaving the agency with “an extremely low level of resources.”
“During the week of June 5, the Treasury is expected to make approximately $92 billion in payments and transfers,” Yellen continued, and “our projected resources would be insufficient to meet all of these obligations.”
Markets closed higher on Friday, buoyed in part by optimism that there would be a deal passed by the House and Senate and signed by the president by June 1.
The new date came amid growing concerns around the world over the United States’ credit rating.
On Wednesday, financial rating agency Fitch announced that it had placed the United States’ triple-A status on “negative watch”.
In a preliminary annual assessment of the United States by the International Monetary Fund on Friday, officials wrote that “tension over the federal debt ceiling could create additional, entirely avoidable, systemic risk for both the United States and the world economy”.
If the United States technically defaults, even for a few days, it could drive up interest rates and undermine confidence in the U.S. dollar. Economists note that America’s adversaries, and especially Russia and China, are watching the current impasse over the debt ceiling with pleasure, convinced that an erosion of confidence in the US dollar would be to their advantage. .
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