• The Latte
  • Posts
  • News: There is 'zero chance' of the US defaulting on its debt, Wharton professor Jeremy Siegel says

News: There is 'zero chance' of the US defaulting on its debt, Wharton professor Jeremy Siegel says

Wharton finance professor Jeremy Siegel has expressed confidence that the US government will not default on its debt. In his recent WisdomTree commentary, Siegel stated that there is a "zero chance" that the debt issue will remain unresolved. He acknowledged that there may be posturing and debates leading up to the last minute before timelines are extended or the debt limit is raised.

Debt ceiling talks between US lawmakers are ongoing, with discussions held on Monday between President Joe Biden and Speaker of the House Kevin McCarthy after reaching an impasse. Failure to reach an agreement could potentially result in a US debt default.

Treasury Secretary Janet Yellen has emphasized the June 1 deadline for Congress to raise the national borrowing limit, warning that the government is unlikely to have sufficient funds beyond June 15.

Despite these developments, Siegel maintains his long-held belief that the debt issue will be resolved. While there are other concerns in the stock market beyond US political issues, the "debt-ceiling saga" remains a top concern for investors. Siegel observed that market activity last week seemed to depend on the prospects of a resolution in debt ceiling talks, and short sellers appeared cautious of being caught off-guard by positive spikes in the market resulting from news of a resolution to the stalemate.