Monday, June 5, 2023

Treasury yields rise, US debt ceiling talks continue

NEW YORK (Reuters) – Orders for U.S. Treasury bonds rose on Wednesday, with notes at 7% on some bonds overshadowed by the first day that the government can’t afford to pay off the debt ceiling.

* Investors avoided debt because of the risk of default if the Treasury Department ran out of money. The yield on bills maturing on June 1 stood at 7.1222%, and briefly reached 7.3710%.

* A sharp increase from Tuesday’s close of 5.992%. Other securities due on June 6 increased to 7,491%.

Negotiators for Democratic President Joe Biden and Republican Congressman Kevin McCarthy resumed what they called productive talks at the White House to raise the $31.4 trillion debt ceiling while trying to avoid a catastrophic default.

* Yields on two-year and 10-year notes fell slightly in the afternoon after the Federal Open Market Committee released minutes from its May meeting, where the Fed raised interest rates by 25 basis points, which showed consensus among officials. for the further tightening of the rules, they became “less certain.”

* The yield on 10-year bonds ended up 3.8 basis points, at 3.736%, and that on 30-year paper rose 2.6 basis points, at 3.978%.

* “To some extent, the vendors have just dried up. It could be obsolete,” said Kim Rupert, managing director of fixed income Action Finance in San Francisco, adding that there are many in the system now that are unprepared or aggressive drivers.

* The yield on debt in one month has reached another all-time high of 5.892%, which raises concerns about late payments when the treasury is vulnerable to running out of funds to keep the money taken away. The last price rose 1.9 basis points, to 5.629%.

*The Treasury auctioned $43 billion in five-year bonds and did so strongly, with a coverage ratio of 2.58 and a high yield of 3.749%. The previous day, it resigned a strong demand of 42,000 million dollars for the sale of two-year debt, which was placed with a high yield of 4.30%.

* The most closely watched part of the yield curve, which represents the spread between two and 10 years and is considered an index of economic expectations, stood at -62.7 points.

* The two-year paper yield, which tends to be in step with the expected rate, rose 8.4 points to 4.368%.

Nation World News Desk
Nation World News Desk
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