Debt Limit Showdown! – Will the U.S. Government Default

The headlines are progressively warning of an imminent U.S. Government default with severe consequences on the economy and markets. Even economists and politicians believe a default could trigger a major shock in the markets or even an economic catastrophe!

The outlook is dire if the U.S. Government defaults…

Every American could feel the pain of Washington’s next showdown

CNN, 1/19/23

GOP debt limit showdown could lead to ‘cataclysmic event’ for global economy

Yahoo! Finance, 1/16/23

Here at InvesTech we’ve seen this media hype and political confrontation repeatedly over our 42-year track record of navigating these political showdowns. Prior to the 2011 debt-ceiling ‘crisis’, here is what we told InvesTech subscribers …and the same thing we’ll say today: don’t panic!

The DON’T PANIC message is reaffirmed by stability in the U.S Dollar and 30-year yield – as we advised readers in our InvesTech Research’s Personal Perspective from July 29, 2011 (above).  The same is true today.

Congress has increased the debt ceiling countless times over the last 20+ years – with confrontation coming from both sides of the aisle – yet no significant long-term reaction in the markets. In fact, the 12 months following the 2011 debt-ceiling meltdown resulted in a 7.2% increase in the S&P 500.  While we don’t truly know what this imminent debt-ceiling showdown will bring, it’s best not to get caught up in the headline hype, but to instead simply keep an eye on the U.S. Dollar and long-term T-bonds 😊.

Jill Mislinski – Research Director & Senior Writer