This is in line with South Korea and Ireland.įitch now forecasts that US government spending will exceed revenue, leading to a deficit of 6.5% of gross domestic product (GDP) in 2023, climbing to 6.9% in 2024. If the US defaults, Fitch will downgrade its credit rating to AA. Under time pressure, all parties involved in the negotiations may be forced to make painful choices. However, looking at past history, it is not new for the US Congress to reach a budget agreement at the last minute. Yellen has repeatedly stated that the US government will run out of cash as soon as June 1, and that it will not be able to repay all the debts by then, which could lead to a default on the debt.Įconomists predict that if the US defaults on its debt, it could trigger a recession, with unemployment soaring and borrowing costs soaring. US Treasury futures fell modestly, while the safe-haven yen rose briefly. Nasdaq 100 futures jumped 1.4%, and S&P 500 futures also rose 0.45% The main reason was that Huida’s (NVDA-USA) financial outlook was extremely bright, and the stock price rose 25% after hours. The news caused Dow Jones futures to fall 100 points at one point, and the decline has converged to 60 points, or 0.18%, by the time of writing. However, the agency also said that it still expects the ruling and the opposition parties to reach an agreement before X day, and the chance that the United States will not be able to pay its debts on time is “very low. Credit rating agency Fitch (Fitch) put the US’s top AAA credit rating on the negative watch list on Wednesday (24th) on the grounds that the government and opposition parties have taken steps to escalate the situation to the brink of default in talks debt ceiling The brinkmanship strategy (brinkmanship), and the time is getting closer and closer to the date when Treasury Secretary Yellen proposed a default deadline of June 1 at the earliest.įitch’s move means that if the US fails to freeze or raise the debt limit before the default “x date”, it may be stripped of the top credit rating.

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