Should you be worried about the debt ceiling crisis?

On Wednesday, April 19th, according to multiple media reports, Republican members of the United States House of Representatives will propose two options - either increase the debt ceiling by $1.5 trillion, or extend the suspension of the debt ceiling limit until March 31, 2024. Whichever option is passed first will be implemented.

Weak tax collections in April suggest that the debt limit deadline may be reached earlier than expected, possibly in the first half of June instead of early August.

A short-term extension could be possible if the debt limit deadline is in June, with the Treasury's announcement in May expediting negotiations.

Financial markets have not yet factored in debt limit risks, except for the widening of sovereign CDS spreads. As the debt limit deadline becomes clearer, pricing of debt limit risks in financial markets is expected to increase.

Goldman Sachs predicts that more tax payment data to be released later this month will provide more insight into the possibility of the US reaching its debt ceiling earlier than expected. Currently, only data through April 14th is available, which typically makes up only 15-17% of total non-withheld filing season tax receipts.
But the tl;dr is that the debt ceiling drop-dead has debt ceiling drop-dead has probably moved forward to late July, but there’s now a chance that it arrives in early June, as the mid-month tax payments fizzle and fail to create a bit of extra breathing room. Here’s what that looks like in chart form:tax payments fizzle and fail to create a bit of extra breathing room.

Here’s what that looks like in chart form: