Investor's guide to the debt ceiling

May 18, 2023
  • BlackRock

Key takeaways:

  • Extraordinary measures currently funding the government could be exhausted by early June if Congressional leaders are unable to agree on a plan to raise the debt ceiling.
  • Republicans and the White House remain opposed on the debt ceiling issue and may not come to an agreement until financial market jitters put enough pressure on both sides to compromise.
  • Volatility in U.S. Treasury bills reflects some nervousness, but so far, broader markets have not reacted much.
  • Avoid trying to time the markets. Stay invested via high-quality stocks and bonds that may be able to better navigate near-term volatility.

Don’t let uncertainty scare you out of the markets. We may see some near-term volatility in markets, but both stocks and bonds delivered positive returns following prior debt ceiling resolutions.

market performance around previous debt ceiling

Source: Morningstar as of 4/30/23. U.S. stocks are represented by the S&P 500 TR Index and U.S bond are represented by the Bloomberg U.S. Agg Bond TR Index. Past performance does not guarantee or Indicate future results. Index performance is for illustrative purposes only. You cannot invest directly in the index.

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