The unthinkable

Treasury Secretary Janet Yellen said the federal government will have to renege on some payments if Congress doesn’t raise the debt limit, and soon, though any plan on how the department would proceed with the unthinkable has yet to be presented to US President Joe Biden. “If Congress fails to do that, it really impairs our credit rating. We have to default on some obligation, whether it’s Treasuries or payments to Social Security recipients,” Yellen said Friday in an interview with Bloomberg Television. “That’s something America hasn’t done since 1789. And we shouldn’t start now.” The US Treasury said Friday it had just $88 billion of extraordinary measures left to help keep the government’s bills paid as of May 10. That’s down from around $110 billion a week earlier, and means about a quarter of what was $333 billion in authorized measures is all that’s left. —David E. Rovella

Risky and safe assets alike have hung on every word and deed of Jerome Powell for more than a year. Now slowly but surely, the Federal Reserve’s stranglehold over financial markets is easing. With the latest inflation and labor-market data giving monetary officials fresh ammo to pause their aggressive policy-tightening campaign, attention on Wall Street is shifting to the possibility of an economic downturn. That’s spurring traders to reward the strongest companies in the stock market while punishing the weakest.

The amount of money parked at money-market funds rose to an all-time high for the second straight week as investors sought higher rates, extending the trend of moving away from lower-paying US bank deposits. With the Fed raising its main policy rate to its highest level in 16 years last week, short-term rates above 5% continue to lure investors to money-market assets.

Turkey’s President Recep Tayyip Erdogan said he will accept the outcome of Sunday’s elections, addressing criticism that members of the government might be unwilling to transfer power peacefully. The governing party and its allies “will consider any outcome at the ballot box as legitimate” and will do “whatever democracy requires,” Erdogan said in a TV interview late Friday. Meanwhile, Russia is denying allegations from Erdogan rival Kemal Kilicdaroglu that it’s meddling with the election.

America’s retirement crisis could cost federal and state governments an estimated $1.3 trillion by 2040. Inadequate retirement savings will result in higher public assistance costs, decreased tax revenue, lower household spending and a decline in standards of living, according to a report done for the Pew Charitable Trusts. The anticipated costs—$964 billion for the federal government and $334 billion for states between 2021 and 2040—are “relatively shocking,” said John Scott, director of Pew’s retirement savings project.

Paris is rapidly establishing itself as the leading finance hub in the European Union, attracting thousands of banking jobs as Brexit reverberates across the continent. For many of those who’ve relocated to the City of Light, it’s an opportunity to embrace all the things that make Paris famous: the art, fashion and food that captures the hearts of so many visitors. Of course, the reality of living in Paris is more complicated than the clichés.

China’s biggest domestic smartphone maker is closing its chip design business as the global smartphone market extends a prolonged decline. Dongguan-based phone maker Oppo becomes one of the first major Chinese tech firms to retreat from the chip sector, after a wave of investment in past years by electronics players wary of tightening US export curbs.

Daniel Penny, a 24-year-old White man from Long Island, was charged with second-degree manslaughter in the asphyxiation death of a Black New Yorker, Jordan Neely, on a New York City subway train. Video of the killing, and Penny’s initial release by police without charges, triggered almost two weeks of vigils, protests and accusations of racial bias across America’s largest city.

Starlux Airlines, a Taiwan-based carrier that just celebrated its inaugural flight from Taipei to Los Angeles, bills itself as a “luxury airline.” That may sound like a contradiction at a time when airlines are anything but luxurious—and the only new brands to make their debut in recent years, Breeze and Avelo, have distinguished themselves with low fares.

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