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Welcome to a special edition of the Markets & Economic Update, provided by the Hancock Whitney Asset Management team as an informational resource for clients and individuals.
In this special webinar, Stephen Morgan, Director of Wealth Portfolio Management, presents his perspective on the looming debt ceiling crisis, its impact on the U.S. economy, and how it may affect your investment portfolio and everyday money matters.
Watch the special update:
Key Takeaways:
The U.S. government has reached the debt ceiling, the statutory maximum it is allowed to borrow. The Treasury Department has said it will soon exhaust the “extraordinary measures” it has employed to maintain normal government operations without issuing debt above the ceiling as early as June 1. This means that at some point in the coming days and weeks, the government may not have sufficient funds to meet all its obligations (government employee salaries, payments to government contractors, social support spending, principle and interest on Treasury Notes and Treasury Bills, etc.).
In the webinar, we discuss what this could mean for investors and the public generally.
In April, Republicans in the House of Representatives passed a bill that would temporarily raise the debt ceiling while requiring significant cuts in Federal spending in Fiscal Year 2024 and caps on the growth of Federal Spending for the next decade along with other cost-saving measures. The Congressional Budget Office estimated the bill would save $4.2 trillion over the next 10 years. The proposal would undercut key Democratic priorities and is a non-starter in the Senate.
The surprise passage of the Republican bill shifted the dialogue around the debate, drawing Democrats led by President Joe Biden into negotiations. Republicans have largely been more effective at public messaging on their goals than have Democrats as the negotiations proceed.
The tone has become more optimistic as the House adjourns for the Memorial Day recess, but as of this webcast, no agreement has been reached.
We outline stances of the opposing sides and describe the contours of the agreement that seems to be taking place, as well as some unlikely steps being proposed to maintain government functions if an agreement isn’t reached.
The levels of spending reductions in a final agreement will have implications for both the stock and bond markets.
We explore how the markets have reacted so far and what this could look like going forward.
The Treasury has a low level of cash on hand currently.
We discuss how this might evolve over the next several days and the implications if the cash level dips too low before the legislation on any agreement can navigate Congress to the President’s desk.
The Hancock Whitney Asset Management team is ready to help guide your portfolio to help you achieve your investment goals.
The information, views, opinions, and positions expressed by the author(s), presenter(s), and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.
This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation.
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