The standoff over the debt ceiling is raising the prospect of default and sending yields on certain Treasury bills soaring. Yields on securities maturing in early June soared on Thursday, with at-risk bills maturing on June 6 featuring yields above 7%.
Yields on securities maturing in early June soared on Thursday, with at-risk bills maturing on June 6 featuring yields above 7%. Yields for bills maturing on June 1 were up more than 1.1 percentage points, clocking in at about 6.9%. Yields for bills maturing throughout the entire month of June soared above 5% on Thursday.The yields on the riskier bills are far higher than the yields on securities that mature on May 30, which were down nearly half of a percentage point and had yields of about 2.
Meanwhile, there is also beginning to be trouble in the stock market, which is expected to devolve into full-on chaos if negotiators fail to reach a deal. Stocks, as gauged by the Dow Jones Industrial Average, have closed out in the red the last four days in a row, although the declines have been modest given the gravity of the situation.
Turmoil in the markets could be intensified by a U.S. credit downgrade, which happened the last time the country got this close to default back in 2011. During that debt fight, S&P announced it was downgrading the country’s credit rating below AAA — something that had never happened before.
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