Are short-term treasuries still a safe haven if there's a US Default?

Are short-term treasuries still a safe haven if there's a US Default?

You have questions, Tom has answers! Send us topics and questions at https://rcsadvisor.com/asktom or email us at [email protected] Visit Our Website: https://www.rcsadvisor.com To book an introductory meeting with Tom: https://www.rcsadvisor.com/book Tom Vaughan is a Certified Portfolio Manager and CEO of Retirement Capital Strategies. Retirement Capital Strategies is a registered investment advisor located in San Jose, California. DISCLAIMER: The opinions voiced in these presentations are for general information only and are not intended to provide specific advice or recommendations for any individual(s). The information provided herein is obtained from sources believed to be reliable, but no reservation or warranty is made as to its accuracy or completeness. Tom Vaughan and Retirement Capital Strategies are not responsible for investment actions taken by viewers. For more details, please read our full disclaimer at https://rcsadvisor.com/media-disclaimer. #investmentincome #retirementplanning #retirementsavings #retirementgoals #investmentstrategy #talkmoneywithtom #investing #successfulretirement #wealthbuilding #finance #stockmarketnews #taxplanning #investmentplanning #retirementplanning #RMDs #requiredminimumdistribution #rothconversion #interestrates #stockmarketanalysis With short term Treasury has been always a safe haven for people investors have fleets here. But won't the US default affect them? You know, are they still a safe haven? If there's a default by the US government? If not, where would you go? Yeah, it's, it's a tough question, because we haven't had a full scale default before. And I guess that's what they're talking about in this question. And I've gotten asked this a couple times by some clients, because oftentimes, we will use T bills, you know, 90 day instruments as a safe haven. And so as a T bill still safe, for example. Here's my outlook on that is like, you have to take a look at kind of the overall scheme of things. You know, where do you go? Right? It's a good question. The banking system, I think, isn't terrible, anything under 250,000 with the FDIC insurance has a good potential to be covered. But what's going to happen in a default is that there's still revenue coming in, there's just not enough money. You know, I said this last last week. But if you have $100, that you need, right, and you have 75 coming in, you're borrowing the other 25. But you still have 75 coming in. So where are you going to put that $75? You know, what part of that $100 expense are you going to cover? And what part are you not going to cover? Who's not that other 25 they should not be allowed to borrow? Because the debt ceiling is capped? What are you going to do with that? I personally feel that T bill, 90 day instrument is something they'll continue to fund. And they've got lots of other things that they could not fund. As far as that goes. But it's it's it's, it's hard to tell for sure. You know, it really is. It's hopefully we hopefully, it's hypothetical question. Yeah, um, one place that people have run into in the past is 2011. The 10 year treasury was a place that people ran to. So in May, the 2011, the Treasury was 3.2%. And by early July, it was down to 2.7%. So bond, those treasury prices went up. Yeah, that's a good appreciation there, that's a big move actually made some money on that. And so people were running into a longer term Treasury during a period of time of possible default. I would guess the reason for that is because first of all, there's some money to be made, you know, because there was some appreciation happening, and sometimes that just gets things going. But also, you know, you're buying something that's gonna mature down the road. And so you've got to bypass the debt ceiling problems, right. Even if it was a two year issue, or a three year issue, you got a 10 year treasury, you're gonna get your money back at the end of that 10 years, if you bought, you know, if you bought at par anyway. Yeah, I don't think the market believes that the US will default for a prolonged period of time. Yeah. fault at all. Yeah, exactly. I would be surprised to see a default. There are ways around the default, right. We've seen some of the different things. And interestingly enough, the White House or Joe Biden said that they were considering the possibility of making the debt ceiling or determining that the debt ceiling was not constitutional, based on wording in the 14th. Amendment. Yeah, right. And so and Yellen said that that's not a good idea. But that doesn't mean they won't do it. Yeah, if push comes to shove, you're gonna have to do something. Yeah, I think if push comes to shove, some of these things that we keep hearing about that don't seem like a good idea might actually happen......