The cost of insuring against a US default hits an all-time high as debt ceiling deadline looms

• The insurance cost against a US default hit a fresh high Thursday as lawmakers wrangle over raising the debt ceiling. 
• One-year US government credit default swaps traded at 152 basis points. 
• President Joe Biden has called leaders in the Republican and Democratic parties to a May 9 meeting. 

The political standoff in Washington over raising the country's $31 trillion debt ceiling drove the cost of insuring against a potential default to new heights Thursday. 

One-year US government credit default swaps traded at 152 basis points, surpassing trades above 134 in late April when those derivatives were the costliest since the 2008 global financial crisis. 

Buyers of credit default swaps, or CDS, seek insurance against a borrower that may not meet its debt-payment obligations. 

The US has never defaulted on its debt, but investors appear to be growing more nervous about that possibility with no deal yet emerging from lawmakers. Treasury Secretary Janet Yellen has warned the US could run out of money to pay its bills as soon as June 1, triggering an unprecedented economic crisis. 

The Republican-controlled House of Representatives last week passed a bill from House Speaker Kevin McCarthy. The bill offered to lift the debt ceiling in exchange for government spending cuts of roughly 8% in 2024, among other terms. 

But the proposal is unlikely to pass the Democrat-controlled Senate or be signed by President Joe Biden. Democrats are calling for a "clean" bill that raises the debt ceiling without conditions. 

Biden has invited congressional leaders McCarthy, House Minority Leader Hakeem Jeffries, Senate Majority Leader Charles Schumer and Senate Minority Leader Mitch McConnell to a meeting on May 9 to work on an agreement, according to Roll Call. 

Moody's Analytics chief economist Mark Zandi told the Senate Budget Committee on Thursday the Republican debt-limit proposal could push the unemployment rate closer to 5% from the current 3.5% reading and raise the likelihood of a recession.