Progress thus far?
A meeting earlier this week between President Biden and Congressional leaders yielded limited progress towards a deal, but a more positive tone was struck regarding the next steps for negotiations. House Speaker McCarthy has expressed optimism that a deal could be reached by this week. However, the timing of a deal remains uncertain due to President Biden's international departure on Wednesday. While we are optimistic that a default can be avoided, we expect increased volatility based on the actual date that the Treasury Department announces as the imminent default and the potential fear tactics that the media may employ to increase viewership. The bottom line is that we anticipate a deal will be struck prior to any default because America is the world's reserve currency and has spent decades convincing the globe that investing in the U.S. government is the safest option available.
What would a deal include?
A few "hot topics" that have been discussed are the return of unspent pandemic emergency funding, progress on permitting reform, and some level of work requirements for aid recipients without dependents. However, it is difficult to determine the extent of spending cuts that will be necessary in a final deal to secure the required bipartisan support.
Is June 1 really the deadline?
While the Treasury has set June 1 as the earliest possible "x-date" for default, we believe that the actual default date is more flexible than advertised. The timeline can still be adjusted based on various upcoming factors, including whether the May Treasury tax receipts exceed or fall below expectations. We will be monitoring the Treasury's update next week on their new estimated "x-date" as "more information becomes available," as stated in a letter sent by Yellen to Congressional leadership earlier this week.
About the Author
Matt Price serves as a Partner and Managing Director for The Price Group of Steward Partners. He resides in Houston with his wife, Emily, their four children and "Fisher" the family golden retriever. Matt studied at the University of Pennsylvania – Wharton School of Business for his Certified Investment Management Analyst (CIMA®) designation after receiving his undergraduate degree from the University of Tennessee - Knoxville. Over the past 12 years, Matt has helped families make high quality, common sense decisions regarding their wealth and their legacy. Matt firmly believes everyone needs a wealth coach!
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The views expressed herein are those of the author and do not necessarily reflect the views of Steward Partners or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.
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