Following a long political negotiation, President Biden signed a deal to lift the debt ceiling at the eleventh hour. Events transpired as the Treasure Investment team anticipated several weeks ago:
We think the larger picture is that there is an extremely low likelihood of a US default. While negotiations may draw out over the next few weeks, ultimately Congress (and the entire financial system) is highly incentivized to avoid the widespread ripple effects that would be brought on by a default.
Prior to the debt ceiling resolution we had advised our clients to stay the course and to maintain their positions in government backed securities via our Managed Treasuries strategy. Treasure Managed Treasuries took advantage of shorter maturity treasury bills that offered higher yields due to uncertainty created by the debt ceiling. Treasure’s clients profited from these yields as predicted. As the following bar chart shows, since the beginning of the quarter Treasure Managed Treasuries outperformed a passive buy and hold T-Bill allocation by 0.7% (on an annualized basis) amounting to a 23% higher net return for Treasure clients.
As the recent debt ceiling event has shown, markets are constantly evolving. Employing active strategies that are flexible enough to opportunistically and safely capitalize on events like this can be hugely beneficial. This is yet another example of the benefit of having a dedicated and experienced investment team to constantly monitor your business idle cash and put it to its best use.
Disclosure: Investments in T-bills: Not FDIC Insured - No Bank Guarantee - May Lose Value
