Failure by Congress to raise the government’s debt ceiling will result in an “economic catastrophe” with rate hikes for years to come, warns U.S. Treasury Secretary Yellen. “A default on our debt would produce an economic and financial catastrophe. A default would raise the cost of borrowing into perpetuity,” Yellen said Tuesday. Key indicators continue to point to a recession, such as the 8.4% decrease in domestic demand for diesel since last year. With decreased factory output and demand for truck drivers, the recovery for trucking looks uncertain. According to Joy Yang of MarketVector Indexes, the Fed’s aggressive tightening and resulting credit issues will be a macro driver for gold prices. “Investors are starting to understand that if the Fed keeps increasing rates, there may be wider economic contagion. So, there’s still a lot of safe-haven support for gold,” she said. “There is a risk that we could have both an economic crisis and inflation. That will be a strong environment for gold,” Yang added.
Reuters via Yahoo Finance/Andrea Shalal
US default on debt would trigger an ‘economic catastrophe’ – Yellen
U.S. Treasury Secretary Janet Yellen on Tuesday warned that failure by Congress to raise the government’s debt ceiling – and the resulting default – would trigger an “economic catastrophe” that would send interest rates higher for years to come.
Yellen, in remarks prepared for a Washington event with business executives from California, said a default on U.S. debt would result in job losses, while driving household payments on mortgages, auto loans and credit cards higher.
She said it was a “basic responsibility” of Congress to increase or suspend the $31.4 trillion borrowing cap, warning that a default would threaten the economic progress that the United States has made since the COVID-19 pandemic.
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Business Insider/Phil Rosen
A US recession looks more and more unavoidable as key parts of the economy slow to a crawl
For many months now, I’ve been having conversations and writing about economic indicators that all point to a recession.
But it still hasn’t officially happened yet, at least according to the secretive, little-known group that’s responsible for declaring them. They’ve stayed mum even as the economy goes haywire.
In any case, there’s a batch of signals in the American trucking industry that have been trying to warn us for months that there’s trouble ahead — and plenty of turmoil that’s already here.
You can read the full article, here.
Kitco News/Neils Christensen
Gold remains well positioned to protect investors from further market turmoil – MarketVector’s Yang
The gold market is struggling to hold its ground at around $2,000 an ounce as markets adjust to shifting interest rate expectations; however, one market analyst said that the precious metal remains well-positioned to protect investors from further market turmoil.
In an interview with Kitco News, Joy Yang, global head of index product management at MarketVector Indexes, said that the inflation threat may have diminished, but investors continue to face a litany of other risks as the global economy has yet to feel the full effects of the Federal Reserve’s aggressive monetary policies.
“We are just starting to see the potential fragility that comes with the end of years of access to easy money,” she said. “This shift from easing to aggressive tightening comes with tighter credit issues and will become a new macro driver for gold prices. Investors are starting to understand that if the Fed keeps increasing rates, there may be wider economic contagion. So, there’s still a lot of safe-haven support for gold.”
You can read the full article, here.