The US hit its statutory debt limit of $31.4 trillion on 19 January. In response, the US Treasury has resorted to accounting sleight-of-hand to ensure it can meet its obligations. But if the debt ceiling is neither raised nor suspended by a yet unknown ‘x-date’ later this year, these workarounds will be exhausted and the US will be unable to borrow more and will technically default on its debt. It is far from the first time the country has stood on the precipice of default.
Both are a remote prospect, as undermining the legislative branch in such a way would likely unsettle investors. Source: Schroders A US default would be felt around the world Assuming that x-date passes without the debt ceiling being raised, coupon payments and redemptions of Treasury securities will stop. Uncle Sam will be in default.