When T-Bills Falter: An Investor’s Guide to MCA Notes
In a climate of mounting economic uncertainty due to the impasse on raising the USA’s debt ceiling, investors find themselves in a complex conundrum. Traditionally, many have sought refuge in seemingly secure financial instruments such as Treasury Bills (T-bills).
However, the current impasse, coupled with the comparatively modest yields on T-bills, prompts a reassessment of strategies that used to be effective. In this context, the performance of Supervest’s Merchant Cash Advance (MCA) might be something you want to consider.
The potential inability of the U.S. federal government to service its debts due to the failure to raise the debt ceiling casts a long shadow over the nation’s financial landscape.
The prospect of the U.S. government defaulting on its obligations – an unprecedented event – risks the stability of global stock markets and could potentially plunge the U.S. economy into recession. For investors, this situation may spark concerns about the impact that a crisis like this could have on traditional investment instruments, including T-bills.
In the face of these major uncertainties, the comparatively superior performance of Supervest’s MCA notes comes into sharp focus. While current returns from 12-month and 24-month T-bills stand at 5.07% and 4.28%, respectively, Supervest’s MCA notes target returns of 10% for 12-month notes and 12% for 24-month notes, offering potentially much higher yields.
Ongoing debt ceiling negotiations
President Biden has returned from his visit to the G7 summit in Japan and is set to discuss the current impasse surrounding the U.S. debt ceiling with Republican representative McCarthy. The President indicated a willingness to combine expenditure reductions with tax modifications in an effort to secure a deal, however, he rejected the Republicans’ recent proposal as “unacceptable.”
The urgency of the situation is accentuated by the approaching 1 June deadline. The U.S. Treasury Department has warned that failure to raise the debt limit by this date could result in the federal government defaulting on its debts, an unprecedented event with globally dire consequences.
The full ramifications of a US default are hard to forecast, but would likely include federal workers being furloughed, global stock markets tumbling, and the U.S. economy potentially falling into a recession.
In contrast to the recent tense dialogues that have led to a stalemate in discussions, McCarthy’s remarks on Sunday suggested a more optimistic outlook. The implications of these developments are of particular significance to alternative asset investors, given the potential impact on economic stability and market performance.
To conclude then, as the impasse on raising the U.S. debt ceiling unfolds, it underlines the necessity of proactive investment strategies in an ever-evolving financial landscape.
The comparatively superior performance of Supervest’s MCA notes offers an example of how alternative investment avenues can potentially offer more attractive returns, even amid uncertain times.
Get in touch with us today to talk about how you could benefit from MCAs.