Investors aren’t expecting Congress to raise the debt ceiling in a timely fashion.
Yields of US Treasury bills that mature next month rose on Monday to a two-year high, The Wall Street Journal reported.
Treasury bills maturing on Nov. 12 saw yields rise to as high as 0.178 percent, up from a Friday closing level of 0.036 percent. Bond yields and prices are inversely correlated.
“It marks the highest intraday level since Oct. 16, 2013, when the yield spiked to 0.505 percent on fear of a debt-ceiling standoff,” WSJ said. It noted that the yield had fallen to 0.100 percent at the time of its Monday morning publication.
“The selling pressure on Monday spread to all the bills maturing during the course of next month,” the WSJ also reported.
The newspaper noted that few investors expect the debt ceiling to actually be breached, but that markets are worried a protracted fight in Congress over an increase in the limit on US borrowing “could delay payments from Treasury.” The Treasury Department is currently predicting that it will exhaust its Congressional mandate to borrow on Nov. 3.
On Monday, Treasury Secretary Jack Lew urged Congress to raise the debt ceiling without haste, describing the now-regular song-and-dance as a game of chicken.
“I worry every time we hit this that sometime there would be an accident, and that would be terrible,” he told CNBC. “Just think about it, we have a government of the United States, a $4-trillion-a-year enterprise, where swings of a few billion dollars can determine whether or not you have enough cash to pay your bills.” He called the situation “ridiculous.”
Read the WSJ story here. Read Lew’s interview with CNBC here.
