bitcoinexchangeguide.com
There isn't much going on in the crypto market, when it comes to price action, as Bitcoin struggles around $42,000, Ether at about $2,900, and the total cryptocurrency market cap hovering at $2 trillion. The latest subdued price action has been in response to Wall Street stocks falling and tech shares hitting hard as treasury yields rose. The yield on the 10-year U.S. Treasury note climbed to 1.54%. Much like yields, the US dollar jumped to hit a new 2021 high of 93.89, last seen in early November. The S&P 500 actually had its biggest one-day percentage decline of 2% since May. Meanwhile, tech-heavy Nasdaq’s biggest one-day decline since March came at 2.8%. Gold has risen to $1,745 per ounce today, up from $1,728 yesterday but it has been on a decline since earlier this month when it was at $1,833. The markets reacted to Treasury Secretary Janet Yellen urging Congress on Tuesday to raise the debt ceiling so that the US government can keep on operating. Federal Reserve Chairman Jerome Powell also endorsed raising the debt ceiling. This week, two hawkish Fed officials also announced their retirement. Dallas Fed Bank President Robert Kaplan said he would retire on Oct. 8, citing the “distraction” of the controversy surrounding his investments. Boston Fed chief Eric Rosengren meanwhile, is retiring this Thursday due to a health condition.
“America Would Default For The First Time In History”
Powell and Yellen testified before the Senate Committee on Banking, Housing, and Urban Affairs on Tuesday. Yellen warned the lawmakers in a letter saying the government would run out of cash by mid-October unless Congress increased the borrowing limit. She said a federal debt default could jeopardize confidence in the US dollar as a global reserve currency and delay government payments that large groups of Americans rely on. “It is imperative that Congress address the debt limit,” Yellen said in her testimony. “If not,” Treasury is estimated to exhaust its extraordinary measures by October 18, and then it would be left with very limited resources that would deplete quickly.
“America would default for the first time in history. The full faith and credit of the United States would be impaired, and our country would likely face a financial crisis and economic recession as a result.”
According to her, raising the debt ceiling is “necessary to avert a catastrophic event for our economy,” and pointed out that it has already been raised 78 times since 1960. Agreeing with Yellen, Powell told lawmakers that the US defaulting on its debt would have “devastating” consequences.
“I think it’s essential to raise the debt ceiling in time to avoid payment defaults of any kind, and the potential effects could be severe.”
“Complete Recover” Is The Focus
The hearing also came at a time when the US economy is slowing, and inflation and labor shortages are persisting. US consumer confidence has also hit a seven-month low, as per the data published by the Conference Board. Yellen called the recovery “fragile, but rapid” in her testimony while Powell testified that “risks to the outlook remain” with the path of the economy depending on the course of the virus. The Fed chief further noted that the US is still far from the labor market goal with the ongoing fear of the virus and caregiving news, among other factors related to a pandemic “weighing on employment growth.” As such, both Powell and Yellen said the government can’ pull back on spending now as US economic recovery was supported in large part by the fiscal policy that helped avert a worse recession. “A rebound like this was never a foregone conclusion,” said Yellen, adding, “In fact, the American recovery is stronger than those of other wealthy nations,” with Congress’ policy choices over the past 18 months being one key factor in overperformance. As such,
“raising the debt limit allows us to pay bills that were incurred because of those acts and others of Congress.”
Meanwhile, Powell said the Fed is committed to providing ongoing support for the US economy to achieve the goals of maximum employment, price stability, and a stable US financial system.
“We at the Fed will do all we can to support the economy for as long as it takes to complete the recovery.”
Both Powell and Yellen are set to testify before the House of Representatives Committee on Financial Services on Thursday now.