12 key points to consider on the debt ceiling and the markets
What could happen to stocks and bonds?
Since the Treasury moved the X-date forward, some Treasury securities maturing in June have lost some of their value. Wells Fargo Investment Institute suggested that investors could hold onto Treasury securities maturing between now and July, predicting that investors will eventually be made whole once the debt ceiling is raised, as long as investors can handle a delay in payment.
The institute noted that amid a previous debt ceiling debate in 2011, the S&P 500 Index dropped roughly 18% between July 20, 2011, and Oct. 3, 2011, with most of the damage occurring after the deal was reached. It noted that what moves markets won’t be the achievement of a deal, but whether the details of the deal match market expectations.