Play Negative-Beta ETFs As U.S. Debt-Driven Deadlock Continues

The latest talks between U.S. President Joe Biden and top Republican Kevin McCarthy regarding the debt ceiling have been described as productive, but a deal has not yet been reached. While House Speaker McCarthy expressed optimism in reaching an agreement, President Biden assured that default is off the table, per BBC News.

Debt ceiling, a spending limit set by Congress, plays a crucial role in determining the government's borrowing capacity. Failing to raise the current cap of approximately $31.4 trillion by Jun 1 could result in a U.S. default, which would have dire consequences for the global economy.

Sticking Points and Potential Consequences

Republicans, led by McCarthy, have demanded over $4 trillion in spending cuts in exchange for raising the debt ceiling, while Democrats propose keeping spending flat. Additional disagreements revolve around work requirements for benefit recipients and the allocation of unspent Covid-19 relief funds.

Progress and Challenges

The tone of the White House discussions appeared more optimistic than in previous weeks of partisan discourse. However, the speed at which a deal can be reached remains uncertain. McCarthy acknowledged that while no agreement has been reached, the talks addressed areas of disagreement.

Both President Biden and McCarthy have committed to daily discussions until a resolution is reached. Speaker McCarthy stressed the need for an agreement this week to provide Congress with ample time to meet the Jun 1 deadline.

Negative-Beta ETFs: A Safe Short-Term Choice?

Though debt default is almost unlikely, the phase of uncertainty is concerning. Against this backdrop, we highlight a few negative-beta ETFs for investors that could be played until no sturdy market rally is ensured. Low or negative beta products demonstrate higher degrees of stability in comparison to their market-responsive counterparts.

ETFs in Focus

AGF U.S. Market Neutral Anti-Beta Fund (BTAL) – Beta: Negative 0.51

First Trust Multi-Strategy Alternative ETF (LALT) – Beta: Negative 0.17

First Trust Managed Futures Strategy Fund (FMF) – Beta: Negative 0.02

Cambria Global Tail Risk ETF (FAIL) – Beta: Negative 0.02

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AGF U.S. Market Neutral Anti-Beta Fund (BTAL): ETF Research Reports

First Trust Multi-Strategy Alternative ETF (LALT): ETF Research Reports

SPDR Bloomberg 1-3 Month T-Bill ETF (BIL): ETF Research Reports

First Trust Managed Futures Strategy ETF (FMF): ETF Research Reports

Cambria Global Tail Risk ETF (FAIL): ETF Research Reports

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