The 'most boring security on the planet' is seeing some wild swings as investors position for the US to possibly default on its debt
climbed Wednesday, pulling down the yield, as investors worrying about a potential US default watched for House Republicans to vote on raising the country's debt limit.
The yield on the 1-month bill fell by 15 basis points to 3.718%, declining from Tuesday's one-week high that left the return on the cash-equivalent security around 4%. The move was the latest big swing for the yield. "Treasury investors seem to be crowding into shorter duration 1-month paper, and at almost any price, to avoid exposure to a potential US government default in the coming months," DataTrek Research co-founder Nicholas Colas wrote in a Wednesday note. Prices and yields move inversely. bill proposing to raise the debt limit by $1.
He illustrated that point by noting the yield over the past two days had surged 69 basis points –"the better part of an entire point in yield. Amazing." The Biden administration on Tuesday confirmed the US president wouldn't sign McCarthy's bill, which requiresWashington's tussle over the debt limit revived memories of the political fighting that brought the US close to a debt default in 2011.dropped 6.6% on August 8, 2011, the first trading session after Standard & Poor's downgraded the US credit rating by one notch to AA+, marking the first ever downgrade of US debt.
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