According to Reuters on the 22nd local time, Wall Street banks and asset management institutions are preparing for the possible debt default of the federal government of the United States.
Jamie Dimon, CEO of JPMorgan Chase Bank, said that the bank has met weekly during this period to discuss the potential impact of the US debt default. Some Wall Street executives who provide treasury bond related advisory services to the federal government have warned that once the US government defaults on its debt, its impact will quickly spread to derivatives, mortgage loans and commodity markets. Given that US treasury bond bonds are often used as collateral for transactions and loans, a federal debt default will cause investors to question the effectiveness of these collateral.
Reuters analysis said that the default of US debt would lead to a sharp rise in US debt yield, a "dive" in the US stock market, a freeze in the short-term financing market and other consequences.
It was reported that Wall Street banks, brokers and trading platforms were planning how to deal with the chaos and sharp fluctuations in the US treasury bond bond market, including "sandbox" on how US treasury bond bonds would be paid and how key financing markets would respond, to ensure that a large number of related transactions occurred at that time had sufficient technical, human and cash support, and to assess the impact on customer contracts. Some large bond investment institutions have issued reminders that financial institutions must maintain high levels of liquidity in order to withstand sharp fluctuations in asset prices and avoid being forced to sell assets at the worst of the situation.
The United States reached its debt ceiling of $31.4 trillion on January 19th this year. US Treasury Secretary Yellen has repeatedly warned that if Congress does not raise the debt ceiling or suspend its effectiveness, the United States may default on its debt as early as June 1st.
