The Commercial Real Estate Alpha Site

As is an annual tradition, the debt ceiling is in the news again and may be cause for concern. The U.S. hit the debt limit—$31.4 trillion—on January 19, 2023, but the Department of the Treasury has been undertaking a set of “extraordinary measures” so that the debt limit does not yet bind. Members of Congress and the President have been conducting a series of meetings in an effort to come to an agreement but efforts have yet to yield results. (Brookings)

If Washington can’t come to an agreement, the impacts could vary – it would largely depend on how long the situation lasts, how it is managed, and the extent to which investors alter their views about the safety of U.S. Treasuries. As investors, the final point could be the most intriguing – perception of safety provides confidence in the system. If that understanding is continuously challenged, could it hurt this safe haven asset and more importantly, the demand for U.S. Treasuries?

“It slightly worries me that when people find a problem, they rush to judgment of what to do.”

– Janet Yellen, Secretary of the Treasury