Will the U.S Default and What Are the Ramifications?

The target or “X” date is a moving target. If the US debt ceiling is not raised or expenses cut the US could default on its debt sometime between June 1 and June 30.


The US is still the safe haven and leading economy in the world……by a long shot. Rates have moved up in the past few days indicating concern about the upcoming debt and budget impasse. The rates have not risen catastrophically which would indicate a belief that the President and Congress will come to some sort of agreement.


Regrettably, this is all about politics. Who has the most to lose and who has the most to gain. We believe it will be sorted out before a default on U.S. debt.


The safest place for investing is still US Treasury obligations and FDIC insured savings accounts. Both are backed by the US government, and both could be affected by a default. US debt could be downgraded by credit rating agencies such as Moody’s or Standard and Poor’s. This would send yields even higher on US debt. Ultimately, we are confident that this situation will be resolved, and the US will continue to be the safe haven and leading economy in the world. There may be some short-term volatility so buckle up. As always, please call us with any questions or concerns.


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