US debt ceiling crisis shakes bond market

'Some very sharp moves'

Elliot Gulliver-Needham
clock • 5 min read

Bond markets have been closely watching the debt ceiling debate in US Congress and have shifted to account for the possibility of a default.

Short-term US Treasury yields reached two-decade highs last week, with the yield at auction on 21-day bills hitting 6.2%, the highest level for any US benchmark bond this century, according to Bloomberg. On the brink of defaulting on its debt, the US has been fast approaching the ‘X-date', the day when it will be unable to pay its bills, which US treasury secretary Janet Yellen has estimated to be between 1 and 5 June. Congress must vote to raise the amount it can borrow to pay for spending it has already committed to, also known as the debt ceiling, but negotiations have been fraught...

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