While the latest rhetoric from Washington is in favor of a so-called clean increase in the debt ceiling, the Treasury bill market isn’t buying it.
(Related: Mnuchin Says Prioritizing Debt Payments `Doesn’t Make Sense’)
Traders are already willing to pay more for debt expiring after October to avoid being caught holding securities potentially vulnerable to a technical default as bills maturing Oct. 5 are yielding 1.078%, versus 1.05% for securities due Nov. 2, as progress to expand the nation’s statutory debt limit stalls.
Treasury Secretary Steven Mnuchin said in a July 28 letter to Congress that it’s “critical” for Congress to act by Sept. 29, the first time a specific date has been attached to debt-ceiling warnings.