Some Sell Short-Term While Facing Uncertainty

BlackRock Investment Institute Senior Managing Director Peter Fisher talked about a trend of investors selling their short-term bonds, as well as market doubt while facing the possibility of the government defaulting on it's debt while appearing on CNBC's Squawk Box Monday morning.  "This is an art, not a science. It's such a massive flow of payments that's got to go through the system that the financial management service is  running and the Bureau of Fiscal Affairs. So it's hard to control that, there'll be disruptions. I don't think that's going to happen," said Fisher. "I think what we see going on in Washington now is the usual shenanigans. Once a bill has to pass, everyone comes out of the woodwork and wants to have their own little thing attached to it, when it creates this dysfunction." Related: Market Primer: Monday, October 14: Investors Flock To The Yen As A Safe Haven Fisher sees massive waves occurring in the United States economy in the unlikely scenario that the debt ceiling isn't raised. If the vote fails to increase the borrowing limit, all bets are off. "If the bill doesn't' pass the 17th and the treasury then is stuck, ah, and can't make payments, the disruption of the economy is going to be massive…It's really a shame. The economy looked like it was doing pretty well. One of my favorite indicators is household income expectations, finally showing a little life in September, jumping up a little bit from five years of anemic readings. So right now we could've seen the economy picking up speed and I really think it'll be a hit to confidence," said Fisher. "There's also an irony. What if Congress actually did the right thing? And said 'Look we're going to sit down and talk about serious tax and budget issues'. What's going to happen to business-fixed investment over the next six months? I don't think it -- I think a lot of corporate planners will say 'Well, if there's a serious tax reform on the table'…[noting that maybe we'll have some tradeoffs and loopholes] Well, they'll slow down investment, and that wont' be good for growth."  At the time of this writing, Jason Cunningham had no position with the mentioned entities. Visit Jason on Twitter @JasonCunningham.