A small team within the Treasury Department alerted top officials about early effects in the US Financial System, nearly five months before it was expected that the US would hit its debt ceiling.
Credit-default swaps are a measure of the cost of insurance of US debt. This is a sign of investors' growing concern about US bonds and other securities.
This early warning, and others over the past month as swaps prices have risen, came from the Treasury Department’s Markets Room. The team of nine analysts is responsible for monitoring global financial markets and providing information to top Treasury Department officials and White House officials.
Top US officials increasingly use the Markets Room as a way to monitor signs of disruption on the financial markets, especially as the US is rapidly approaching a possible default date early in June.
In the same way a doctor would want to know the vital signs of their patient before deciding how to treat him, Treasury keeps up to date on the different ways the economy can be healthy or unhealthy. Wally Adeyemo, Deputy Treasury Secretary at CNN, said that understanding the market is a part of this.
He said, "We're spending time with them to better understand what the costs are now, to ensure that we can share this information with Congress and prevent us from being in a situation where, for the first time ever in our history we are unable to meet all of our financial obligations on time."
Each day, staffers wake up at 3:30 am. ET to collect data on overnight market movements and to begin calling contacts in European and Asian markets.
These data and insights are delivered to the inboxes at the White House, Treasury Department and other top policymakers.
9 a.m. ET, before the US markets open, Treasury Secretary Janet Yellen and her senior leadership team huddle virtually with the Markets Room and other key Treasury Department aides for a briefing on the state of financial markets and issues to watch that day. Before the US markets open at 9 a.m. ET, Treasury Secretary Janet Yellen, her senior leadership team, and the Markets Room, along with other key Treasury Department aides, gather virtually to discuss the current state of the US financial markets, and the issues that need attention.
This daily briefing in recent weeks has been heavily focused on the reverberations from the debt ceiling standoff. From updates on Treasury Bill auctions to market reactions, and commentary from economists and market analysts.