Tuesday, June 6

US one-month Treasury yields hit record high

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Yields on one-month US T-bills jumped to a record high in London trade on Tuesday as concerns about the United States hitting its debt ceiling continued to weigh on financial markets.

One-month T-bill yields rose as far as 5.888% in thin trade and were last up 25 basis points at 5.865%, according to Refintiv data.

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President Joe Biden and House Speaker Kevin McCarthy have vowed to keep talking to find an agreement on how to raise the US government’s debt ceiling.

There are less than two weeks before June 1, when the Treasury Department has warned that the federal government could only be able to pay some of its debts.

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“We reiterated once again that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement,” Biden said in a statement after Monday’s meeting, which he called “productive.”

“Markets will remain volatile during the negotiations, but we think the US government will avoid default with a suspension as happened in 2018, before reaching a broader deal on the issue,” said Massimiliano Maxia, senior fixed-income strategist at Allianz Glo bal Investors.

A bipartisan budget act in 2018 suspended the debt limit through March 1, 2019. It provided an automatic “catch-up” to account for borrowing up to that point, effectively raising the debt limit by $1.5 trillion.

Yields on 10-Year US Treasury were flat at 3.72%.

(Reporting by Stefano Rebaudo, editing by Alun John, Kirsten Donovan) ;))


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