The issue of raising the US debt ceiling has caused economic concern worldwide. Afterall, reports indicated that a default could occur in the US within the first two weeks of June.
However, the scheduled meeting between US President Joe Biden and other congressional leaders have been postponed and rescheduled for the beginning of this week. Since disagreements are very significant, it is unlikely that the upcoming negotiations would lead to any progress.
Republican representative Daniel Webster said the stalemate is due to budget cuts. But if no resolution is made, World Bank President David Malpass said a default will occur, which will exacerbate the already slowing global economy
Key events to watch this week include the debt ceiling debates, additional macroeconomic data such as retail sales, and threats in the banking sector. There are many risks that will drive investors to safe haven assets. There is too much geopolitical stress, and the debt ceiling debates have reached a stalemate.
Additional market stress is looming, and credit conditions are tightening. This is bad news for the economy. Recently released macroeconomic data also shows that inflation is persistent. In April, the overall annual rate fell below 5%. Until a new Fed dot plot is published at the meeting in June, expectations of a rate hike will remain in uncertain.