Janet Yellen warns of economic chaos, and Biden calls for an urgent meeting.
On Sunday, Janet Yellen, the Treasury Secretary, warned that failure to increase the debt ceiling would lead to a severe economic downturn in the United States. She further added that by June, the Treasury Department may exhaust its measures to pay its debt obligations, which she had already cautioned earlier. Yellen highlighted that Congress must act to avoid financial and economic chaos. She emphasized that the U.S. has been using extraordinary measures to prevent default, but it’s not feasible for the Treasury Department to continue doing so. Lawmakers have been unable to come to a consensus to raise or suspend the debt ceiling, and there’s a risk of default. Yellen has urged Congress to act decisively and quickly to avoid economic calamity, as new data on tax receipts has led the Treasury Department to move up its estimate of when it may be unable to meet all government obligations to as early as June 1. This date is earlier than what was previously anticipated by Wall Street economists.
US President Joe Biden has called for an urgent meeting with the top 4 congressional leaders at the White House on May 9 to discuss how to prevent a debt default.
Both Parties appear to be sticking to their positions, with House Republicans demanding spending cuts as a condition for a debt ceiling increase, while Democrats refused to negotiate over the payment of the country’s bills. The White House official stated that Biden will emphasize to congressional leaders that they must act to avoid default without any conditions. The meeting was scheduled to discuss the “urgency of preventing default” and how to initiate budget negotiations.
Binance has ended the ban on withdrawals of bitcoin as trading volumes on the exchange surged.
Due to an increase in processing fees and high trading volumes, Binance, the world’s largest cryptocurrency exchange, halted bitcoin withdrawals for several hours on Monday. Binance cited a backlog of transactions pending due to a lack of incentive offered to miners to log the trades on the blockchain. As a result, Binance increased the fee to be paid to miners for processing transactions and resumed bitcoin withdrawals after several hours of suspension. The halt briefly pushed bitcoin prices lower, with the cryptocurrency down by about 1% to $28,162. Binance’s set fees did not anticipate the recent surge in network gas fees, which refer to payments made to miners for processing transactions on the blockchain. Joshua Chu, the group chief risk officer at blockchain technology group XBE, Coinllectibles, and Marvion, emphasized that large withdrawals could result in high gas fees, particularly during times of network congestion. In March, Binance suspended deposits and withdrawals due to technical issues. Binance’s trading volume in the past 24 hours was $6.9 billion, according to CoinMarketCap, which is over eight times more than the next-largest venue, Coinbase.
ChatGPT mother company suffered losses exceeding half a billion dollars in 2022.
A report revealed that OpenAI suffered losses of $540 million last year while developing its artificial intelligence tool ChatGPT, according to The Information. Despite OpenAI strengthening its financial position with support from Microsoft and growing demand for its chatbot, the report emphasizes that costs have increased in the months leading up to the release of ChatGPT. OpenAI faced a complaint to the Federal Trade Commission in March urging an investigation into the company and a suspension of commercial publication of its products, including the latest version of ChatGPT. The Italian National Data Protection Authority also ordered an effective ban on the ChatGPT chatbot, accusing OpenAI’s content creators of “illegally collecting personal data”.
Gold rises as US inflation data awaited.
Gold rose on Monday, May 8, as the dollar fell, while investors awaited key U.S. inflation data scheduled for release this week, which could affect the position of the U.S. Federal Reserve on monetary policy.
Gold rose 0.2% in spot trading to $2,020.80 an ounce by 06:34 GMT. U.S. gold futures also rose 0.2% to $2,029.30.
The dollar index fell 0.1%, making the yellow metal more attractive to foreign buyers.
U.S. consumer price index data is scheduled for release on Wednesday.
Tim Waterer, senior market analyst at K.C.M. Trading, said that any indications of declining inflation would weaken the U.S. currency due to expectations of a reduction in U.S. interest rates, which could lead to a rise in gold prices.
Waterer added that gold would be among the “main beneficiaries” if there were other signs of weakness in the U.S. economy, and prices could move up to $2,100 sooner rather than later.
As for other precious metals, silver rose 0.1% in spot trading to $25.67 an ounce. Platinum also rose 0.5% to $1,064.03, while palladium rose 1.5% to $1,513.11.
German industrial production declined by 3.4% in March.
On Monday, May 8th, the German Federal Statistical Office announced that the country’s industrial production had decreased more than expected in March. The index fell by 3.4% compared to the previous month, while analysts had predicted a 1.3% decline, according to a Reuters survey. Producer prices also recorded a contraction of 2.6% in March, widening the pace of this contraction from 0.3% in the previous month. A survey conducted on April 24th showed that business morale in Germany had increased slightly in April, supported by improved company expectations, which boosts positive indicators as Europe’s largest economy hopes to avoid a recession in the winter months. The Ifo Institute stated that its business climate index reading reached 93.6, up from the adjusted reading of 93.2 in March.
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