For some context, the cutoff date for this is currently in early June and typically the can will get kicked down the road. We’re likely to see Yellen announce a revised date in the near future on this.

However, JP Morgan says that it expects both the debate over the debt ceiling as well as the one on federal funding to run „dangerously close“ to their final deadlines. Adding that there is a „non-trivial risk“ that US Treasuries will face a technical default situation. The firm also says that it expects the Treasury could run out of available resources by the middle of August.

The nature of the situation depends on the ongoing tax season and typically the federal government runs a deficit closer to the summer (around the end of Q3), which is the real risk. But as we have seen in the past, this is something that tends to get done one way or another at the end of the day with lawmakers likely to lift the borrowing cap if all else fails.

This article was written by Justin Low at www.forexlive.com.