HERE IS WHAT INVESTORS ARE DOING TO PROTECT THEMSELVES AGAINST U.S. DEBT DEFAULT
By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Protecting Against Default
Please click here for a chart of 20-year Treasury Bond ETF (TLT).
Note the following:
- It may seem oxymoronic but big institutional investors are buying long dated Treasury bonds to protect themselves against a potential U.S. debt default. The reason long dated Treasury bonds are being bought is they went up during 2011 debt ceiling negotiations. In 2011, the U.S. credit rating was downgraded.
- The presumption is that if debt ceiling negotiations break down, long bonds will move higher.
May 12, 2023