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State defaults in the United States are instances of states within the United States defaulting on their debt. The last instance of such a default took place during the Great Depression , in 1933, when the state of Arkansas defaulted on its highway bonds, which had long-lasting consequences for the state. [ 1 ]
Here's a primer on the debt ceiling and examples of the possible consequences if the United States is unable to pay its debts. ... than 7 million jobs and see stock prices fall by almost a fifth ...
When interest rates rise, bond prices tend to fall. This happens because new bonds are issued with higher interest payments , making them more attractive than existing bonds with lower payouts.
The US would hit the new ceiling in the second half of the year, with the potential of default coming in the first half of 2026, according to his back-of-the-envelope calculation.
By 1841, nineteen of the twenty-six U.S. states and two of the three territories had issued bonds and incurred state debt. [1] Of these, the aforementioned states and territory were forced to default on payments. Four states ultimately repudiated all or part of their debts, and three went through substantial renegotiations. [2]
Even if the Treasury were to prioritize payments on the debt above other spending and avoid formal default on its bonds, failure to raise the debt ceiling would force the government to reduce its spending by as much as ten percent of GDP overnight, leading to a corresponding fall in aggregate demand. Economists believe that such a significant ...
That also caused a selloff in government bonds and the benchmark 10-year Treasury yield reached 4.53% on Thursday, up around 3 basis points, after an 11 bps jump in the aftermath of the Fed. [US/]
“Extraordinary measures” will be needed to keep the US from defaulting on its obligations if the nation’s debt ceiling isn’t raised or suspended by mid-January, Treasury Secretary Janet ...