How Can You Safeguard Your Wealth When the Debt-Limit Default Risk Is Higher Than Ever?
President Joe Biden, House Speaker Kevin McCarthy and other congressional leaders are planning a meeting Tuesday for talks on spending as a potential US debt default looms — though plans could still change. Biden has been tight-lipped about terms of the negotiation but said he believed a deal could be reached, adding he's a "congenital optimist." The debate is bad for markets either way, according to Morgan Stanley's Michael Wilson. He says many are framing the event as "a lose-lose" given the volatility it's likely to cause, even though most expect the situation will be resolved. He predicts sharp swings in equity markets.
The risk of a US debt default is greater than it's ever been, threatening to tip global markets into a brand-new world of pain. For investors, there are few places to hide other than the oldest hedge in the book: gold.
The precious metal is by far the top pick for those seeking protection in case Washington's game of chicken over the debt ceiling ends in a crash, according to Bloomberg's latest Markets Live Pulse survey. More than half of finance professionals said gold is what they would buy if the US government fails to honor its obligations.
![Source: Bloomberg](https://ussnsimg.moomoo.com/feed_image/71445112/bf942b26e89e3474aca375051c202538.png/bigmoo)
About 60% of MLIV Pulse respondents said the risks are bigger this time around than in 2011, the worst debt-limit crisis of the past. The cost of insuring against non-payment through one-year credit default swaps has surged well past levels seen in previous episodes, although they still suggest that the actual chance of a default is relatively slim.
![Source: Bloomberg](https://ussnsimg.moomoo.com/feed_image/71445112/2595e29e769433e6be197388186d32de.png/bigmoo)
Investment professionals are less pessimistic on the outlook for the S&P 500 Index this time than retail traders.
![What impact will this standoff have on the dollar's standing? Source: Bloomberg](https://ussnsimg.moomoo.com/feed_image/71445112/37e276607b913005affec4ffc9d0aa14.png/bigmoo)
The risk of a pivot away from the greenback is something that investors are giving serious consideration. An earlier MLIV Pulse survey showed that a majority of respondents see the dollar making up less than half of global reserves within a decade.
Source: Bloomberg
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WorldwideNicole : Optimistic![undefined [undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36)
104014063 : Seize the opportunity.
104014063 : $SGX (S68.SG)$
Gilley : damage done can only get worse at this point