Here's why bonds may actually rally if the US runs out of cash to pay its debts, according to UBS

Wed, 05/03/2023 - 13:37

pelosi, schumer, mcconnell, mccarthy — House Representative Nancy Pelosi, Senate Majority Leader Chuck Schumer, Senate Minority Leader Mitch McConnell, and House Majority Leader Kevin McCarthy in February 2021.
AP Photo/Susan Walsh

A deadline is approaching for lawmakers to reach a deal on raising the $31 trillion debt limit.
US bonds may "ironically" rally if Congress can't reach an agreement, says UBS.
UBS says the risk of a US debt default as "very low".

The clock is ticking down for US lawmakers to come up with a deal to raise the country's $31 trillion debt limit, but not reaching an agreement could ignite a counterintuitive rally in the Treasury market, says UBS.