Debt ceiling tensions raise the specter of US default

Logically, the election of Kevin McCarthy as Speaker of the House of Representatives – after 15 rounds of voting – should have reassured investors. But this snatched victory has revived a threat. To see the United States default on its debt for the first time in its history.

In question, the debt ceiling rule. This establishes the federal borrowing limit of the United States each year. Once this amount is reached, the Treasury can no longer issue bonds on the markets. Deprived of this funding, the US government can no longer pay its officials and suppliers. And it cannot repay its bondholders. Such a situation would result in a non-payment.