U.S. leaders gamble with world’s most trusted asset in debt showdown

May 28, 2023

President Biden and House Speaker Kevin McCarthy (R-Calif.) on Saturday reached an “agreement in principle” to raise the federal debt ceiling, but any deal still requires congressional approval. Treasury Secretary Janet L. Yellen has indicated that the federal government would exhaust its funds by June 5 if the debt ceiling remains the same. If that return is no longer guaranteed — because the government chooses not to make a scheduled payment — Treasurys’ value no longer would be known for certain. In the 2011 debt ceiling standoff, the Standard & Poor’s 500 index fell nearly 19 percent between early July and early October as the crisis was resolved. “We’re really understating what will happen when the debt ceiling is raised,” Chandler said.