{"id":13409,"date":"2023-05-25T00:10:31","date_gmt":"2023-05-25T04:10:31","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/vanguard-brace-for-volatility-over-debt-limit-negotiations\/"},"modified":"2023-05-25T00:10:32","modified_gmt":"2023-05-25T04:10:32","slug":"vanguard-brace-for-volatility-over-debt-limit-negotiations","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=13409","title":{"rendered":"Vanguard: Brace for Volatility Over Debt Limit Negotiations"},"content":{"rendered":"
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Investors should brace for more volatility in financial markets as lawmakers wrestle over the debt limit, but shouldn\u2019t t worry the U.S. will default on its debt, according to Vanguard.<\/p>\n

The second-largest asset manager\u2014with 7.7 trillion in global assets under management\u2014believes an agreement will be reached. <\/p>\n

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\u201cWe don\u2019t think there will be a default, but we do believe the decision will be in the 11th hour just before the X-date,\u201d Sara Devereux, global head of the fixed-income group at Vanguard, which manages over $2 trillion in assets, told Barron\u2019s<\/em>.<\/p>\n

Stocks were sliding Wednesday after House Speaker Kevin McCarthy said an agreement hadn\u2019t been reached yet. Treasury Secretary Janet Yellen has said Congress has until June 1\u2014the so-called X-Date\u2014to raise the debt ceiling or risk default.<\/p>\n

Devereux said investors should expect more volatility in the lead-up to a deal, and there is a chance the X-date could move, creating more uncertainty.\u00a0<\/p>\n

\u201cWe know there are a lot of tax receipts coming on June 15,\u201d she said. \u201cThat could be helpful. There\u2019s also the possibility that they temporarily suspend it and punt the decision to September alongside the budget decision.\u201d<\/p>\n

If a deal on raising the debt ceiling isn\u2019t struck by June 1, the U.S. may not have enough money to meet its obligations, risking a technical default and potentially triggering a financial crisis.<\/p>\n

In that event, Devereux said Vanguard is prepared to navigate a technical default on behalf of its clients. Such a default \u201cmeans the payment will come, it\u2019s just a matter of when, and a technical default is just an operational headache,\u201d she said.<\/p>\n

For now, investors should tune out the noise and stay focused on the long term, Devereux said. <\/p>\n

\u201cBe aware there\u2019s going to be volatility and as always, and particularly in times of volatility, know what\u2019s in your portfolio and work with managers with good risk management practices,\u201d said Devereux. \u201cNo one likes surprises. And volatility will find cracks in a portfolio.\u201d<\/p>\n

In a note published on Tuesday, Greg Davis, Vanguard\u2019s chief investment officer, urged investors \u200b\u200bto have a plan they can stick with for the long term and cautioned against trying to time the market.<\/p>\n

\u201cTime in the markets is much better for a portfolio than market timing,\u201d he said. \u201cMarket timing is incredibly challenging, as the best and worst performance days often happen close to one another. In many cases, timing the market for re-entry simply results in selling low and buying high.\u201d<\/p>\n

Write to Lauren Foster at lauren.foster@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Investors should brace for more volatility in financial markets as lawmakers wrestle over the debt limit, but shouldn\u2019t t worry the U.S. will default on its debt, according to Vanguard. The second-largest asset manager\u2014with 7.7 trillion in global assets under management\u2014believes an agreement will be reached. \u201cWe don\u2019t think there will be a default, but […]<\/p>\n","protected":false},"author":1,"featured_media":13410,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-13409","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nVanguard: Brace for Volatility Over Debt Limit Negotiations | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Investors should brace for more volatility in financial markets as lawmakers wrestle over the debt limit, but shouldn\u2019t t worry the U.S. will default on\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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