World stocks decline under threat of federal default 

Global stock markets and Wall Street futures fell this morning as the U.S. government crept closer to a potentially disruptive default on its debt, the Associated Press reports. On Wall Street, futures for the S&P 500 and the Dow Jones Industrial Average were off 0.3%. 

Wall Street’s benchmark S&P 500 index fell 1.1% on Tuesday. That followed a meeting Monday between Speaker Kevin McCarthy and President Joe Biden that ended with no agreement. The Dow dropped 0.7%, and the Nasdaq composite lost 1.3%. 

Republicans in Washington are pressing for cuts in aid to the poor and other spending in exchange for agreeing to raise the amount the government can borrow. Biden has proposed a mix of cuts and higher taxes on the richest Americans, which McCarthy has rejected. 

Without an agreement, the government will run out of cash to pay bills on about June 1. That could send shockwaves through the global financial system. 

Market prices of Treasury debt that is due to be paid around the date of a possible default have fallen due to uncertainty about payment. 

The yield on the 10-year Treasury, or the difference between the market price and the payout at maturity, ticked down to 3.70% from 3.72% late Monday. The yield on the two-year Treasury widened to 4.34% from 4.32%. 

In energy markets, benchmark U.S. crude rose 97 cents to $73.88 per barrel in electronic trading on the New York Mercantile Exchange. The contract advanced 86 cents on Tuesday to $72.91.