Illustration: Aïda Amer/Axios

Mounting U.S. debt, and rising credit-card delinquencies, are creating what one big bond investor describes as a "cocktail of economic risk."

Why it matters: These realities run contrary to the overall narrative of a strong U.S. economy.

What's happening: The Federal Reserve warned that corporate America is taking on too much debt, Axios' Dan Primack writes.

  • Rising consumer debt is also a worry. U.S. banks are tightening their lending standards and raising rates on commercial loans and credit cards, according to Axios' Dion Rabouin and Courtenay Brown.
  • Credit card delinquency rates in Q1 hit the highest level since 2012, driven partly by a spike in overdue payments by people ages 18–29, according to the New York Federal Reserve.
  • U.S. national debt is $1 trillion higher than the previous record.

What they’re saying: "Junk bonds are flying out the door once again. Deeply indebted companies are borrowing even more to pay equity holders." (Bloomberg)

  • On the consumer front: "Borrowers think life is good and income is rising, and ... they overextend themselves," said James Chessen, chief economist at the American Bankers Association. "You tend to see more of that behavior" toward the end of an economic cycle.

What to watch: As companies struggle under their enormous debt loads, expect them to start looking to the high-flying stock market for rescue.

  • First up: Chewy, being spun out by its highly-leveraged parent, PetSmart, for much-needed cash.

Go deeper ... Warning: Signs of credit crisis grow

Go deeper

Trump refuses to commit to peaceful transfer of power if he loses

President Trump repeatedly refused to say on Wednesday whether he would commit to a peaceful transition of power if he loses the election to Joe Biden, saying at a press briefing: "We're going to have to see what happens."

The big picture: Trump has baselessly claimed on a number of occasions that the only way he will lose the election is if it's "rigged," claiming — without evidence — that mail-in ballots will result in widespread fraud. Earlier on Wednesday, the president said he wants to quickly confirm a replacement for Justice Ruth Bader Ginsburg because he believes the Supreme Court may have to decide the result of the election.

"Not enough": Protesters react to no murder charges in Breonna Taylor case

A grand jury has indicted Brett Hankison, one of the Louisville police officers who entered Breonna Taylor's home in March, on three counts of wanton endangerment for firing shots blindly into neighboring apartments.

The state of play: Angering protesters, the grand jury did not indict any of the three officers involved in the botched drug raid on homicide or manslaughter charges related to the death of Taylor.

Dave Lawler, author of World
Updated 2 hours ago - World

U.S. no longer recognizes Lukashenko as legitimate president of Belarus

Lukashenko at his secret inauguration. Photo: Andrei Stasevich/BELTA/AFP via Getty Images

The U.S. no longer recognizes Aleksandr Lukashenko as the legitimate president of Belarus, the State Department said in a statement on Wednesday.

Why it matters: Lukashenko has clung to power with the support of Russia amid seven weeks of protests that have followed a blatantly rigged election. Fresh protests broke out Wednesday evening in Minsk after it emerged that Lukashenko had held a secret inauguration ceremony.

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