A recent email I received from “P” asked for my opinion of “the current safety of U.S. Treasuries in this uncertain time.”
I’m positive on the creditworthiness of U.S. Treasury securities. Global investors are taking the same position with their investments. Of course, Treasury prices fluctuate depending on inflation, the state of the economy and other factors. There are signs “bond market vigilantes” might push Treasury yields higher and bond prices lower because of economic and political concerns. But that kind of market risk is very different from worries about safety from default.
The caveat is, like many market observers and participants, I worry about the longer-term implications of fraying trust in the full faith and credit of the federal government in an era of debt-ceiling shenanigans and fiscal profligacy.
Few financial beliefs hold as much sway in the global capital markets than the idea Treasuries are as close…
