Treasury Investors Fear Default

The approaching deadline for Congress and President Biden to raise the U.S. government's borrowing limit is causing concern among individual investors who have bought Treasurys. Treasury Secretary Janet Yellen has warned that the government could run out of room to sell new debt as early as June 1, potentially leading to delays in cash payments to owners of maturing securities. This prospect undermines the perception of Treasury debt as a reliable asset and challenges the notion of a U.S. default, which was previously considered unthinkable. While many analysts believe a financial calamity will be avoided, some investors are becoming more cautious and choosing to stay on the sidelines until the debt-ceiling situation is resolved. While many investors remain optimistic that a resolution will be reached, the uncertainty surrounding the debt-ceiling debate has prompted some to adopt a more cautious approach or seek alternative investment strategies.