Hello, YieldAlley readers! In this issue:

💳 Inside the Credit Card Battle to Win America’s Richest Shoppers (Bloomberg)

🤖 OpenAI blocks Sora 2 users from using MLK Jr.'s likeness after "disrespectful depictions" (CBS)

📈 The Role of Sticky Dividends During Recessions (SSRN)

🪙 Stablecoins 2030 (Citi)

🧠 Why Your Brain Hates Good Investment Strategies (Italian Leather Sofa)

The government shutdown has now entered its third week, becoming the fifth-longest federal work stoppage in U.S. history with no immediate resolution in sight. After the Senate's tenth failed attempt to advance funding bills, lawmakers headed home for the weekend, ensuring the shutdown will reach at least 20 days when they return Monday. While the political theater continues in Washington, Treasury investors can largely breathe easy, your bonds remain one of the safest assets during this turbulence.

Government funding crises come in two distinct flavors. The current situation is a budget crisis, Congress hasn't authorized spending for the new fiscal year. This differs fundamentally from a debt ceiling crisis, where the government can't borrow new money to pay existing obligations.

In a budget shutdown like today's, Treasury payments are completely protected. Interest and principal payments continue uninterrupted because they're mandated by law, not subject to discretionary spending freezes. Social Security, Medicare, and other entitlements also continue functioning normally. The government must make these payments regardless of the shutdown.

The bond market's response has been revealing. Rather than fleeing Treasuries, investors have been buying them. Yields have remained flat or declined across the curve, the classic sign of a flight to safety. Even amid government dysfunction, Treasuries maintain their status as the ultimate safe haven asset.

Equity markets have taken the shutdown in stride, closing September strongly despite some mid-week volatility. The dollar dipped slightly but continues its year-long trend without dramatic moves. These muted reactions suggest markets view this as temporary political noise rather than an economic crisis.

We've been here before, eight times in the past 40 years, roughly once every five years. The average shutdown lasts just over 10 days, with the longest (2018-2019) running 34 days. While shutdowns do create short-term economic drag, the 2018-2019 episode reduced quarterly GDP growth by an estimated 0.4 percentage points, the economy has consistently recovered these losses quickly once government reopens.

More importantly for Treasury holders, the U.S. has never defaulted on Treasury obligations during any shutdown. Not once. This perfect track record across administrations of both parties provides strong reassurance.

For buy-and-hold investors: Do nothing. Your Treasury interest payments will arrive on schedule, and you'll receive full principal at maturity. The shutdown creates no meaningful risk to your holdings. If anything, the flight-to-safety dynamic temporarily increases demand for your bonds.

For active traders: Some might see opportunity in the current dynamics. If you believe Treasury prices are temporarily elevated due to safe-haven buying, you could consider selling now and repurchasing after the crisis resolves. However, we're talking about movements of just a few basis points, hardly worth the effort and transaction costs for most retail investors.

Two factors warrant monitoring. First, some economic data releases may be delayed during the shutdown, potentially affecting inflation-indexed bonds (TIPS and I Bonds) that rely on CPI adjustments. However, any delayed adjustments would likely be made retroactively once the government reopens.

Second, while previous shutdowns involved temporary furloughs with full back pay, the White House has initiated actual layoffs during this shutdown, a choice not required when government funding lapses. This represents unprecedented territory that could extend the economic impact beyond typical shutdowns. Trump budget director Russell Vought has suggested layoffs could exceed 10,000 workers, though unions have obtained a temporary pause on many of these reductions.

Government shutdowns are disruptive political events, but they're not Treasury crises. Your bonds remain secure, payments will continue, and markets have decades of experience navigating these situations. Economists estimate each week of shutdown reduces fourth quarter GDP by about 0.1 percentage point, concerning but not catastrophic for the broader economy.

While federal workers face furloughs and uncertainty, with active-duty military personnel required to work without pay until the shutdown ends, Treasury investors can rest easy. Your holdings remain among the world's safest assets, shutdown or not. Sometimes the best investment strategy is simply to tune out the political noise and stay the course.

The real question isn't whether your Treasuries are safe, they are. It's how long politicians will take to resolve their differences over healthcare subsidies, the core issue with Democrats demanding continued funding for Affordable Care Act subsidies while Republicans insist these should be addressed separately after reopening the government. Until then, collect your interest payments and ignore the headlines.

Government Money Market Funds (7-Day Yields)

Brokered CD Rates (6-Month Rate)

ETFs (30-Day Yields)

United Airlines is offering MileagePlus members a travel-activated benefit that provides 7 days of free Instacart delivery when flying domestically, plus multiple bonus mile opportunities for new customer acquisition, creating a unique loyalty integration that ties grocery delivery perks to flight activity rather than traditional spend-based earning.

This partnership takes an unconventional approach by tying grocery delivery benefits to flight activity rather than creating a traditional miles-per-dollar earning structure, effectively monetizing the pre/post-travel grocery restocking window when travelers typically need delivery services most. The 7-day benefit window strategically captures both pre-trip preparation and post-return restocking needs, while the cascading bonus structure (500 → 5,000 → 5,000 miles) creates a 10,500-mile acquisition funnel for new Instacart users who convert to paid membership.