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Newsquawk Daily US Opening News
US futures lower amidst looming gov’t shutdown
Tuesday is month/quarter end
In our blog
Have you ever heard of the term “month-end rebalancing?”
According to Investopedia, Rebalancing is the process of realigning the weightings of a portfolio of assets. Rebalancing involves periodically buying or selling assets in a portfolio to maintain an original or desired level of asset allocation or risk.
Many international equity managers like to minimize the forex exposure of their equity portfolio and put on forex hedges to reduce that risk. Thus, at the end of each month/quarter they adjust the size of their hedges to bring them back into line with the current size of their portfolio.
What does this mean for the forex trader?
Have you ever heard of the term “month-end rebalancing?”
We were asked if the U.S. Treasury continues to issue bonds during a government shutdown.
- Debt issuance is considered an essential function. Even in a shutdown, Treasury must manage the government’s cash flow and ensure the U.S. can finance existing obligations. That means continuing to hold Treasury auctions (bills, notes, bonds).
- Shutdowns affect appropriations, not debt management. A shutdown happens when Congress hasn’t passed a spending bill, which halts many “non-essential” federal operations. But paying interest on the debt and rolling over maturing securities are legal obligations under the Constitution and federal law.
- Only the debt ceiling would stop issuance. A shutdown doesn’t suspend borrowing authority — that’s controlled separately by the statutory debt limit. If the debt ceiling isn’t raised, then Treasury can’t issue new debt (except to replace maturing debt).
- To sum up, Bond auctions continue as scheduled in a shutdown, unless the U.S. hits the debt ceiling.
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