Treasury Bill Yields Are Surging As Debt-Ceiling X-Date Approaches

UDPATE: At today's Treasury auction - 4-week bills yield 13bps, 52-week bills yield 11.5bps... 1.5bps inverted!

Whether Treasury Secretary Lew's words were meant to calm and chaosify the markets yesterday, his comments on the debt ceiling have sparked a notable sell-off in ultra-short-dated Treasury Bills. As we noted previously the 2/28 ish date appears to be the market's bogey [4] for now with the yield more than tripling from 3bps to 11bps in the last 2 days. CDS on the USA has also risen notably in the last few days with the 5Y now trading inverted to the 1Y cost of protection once again.

Major jump in T-Bill yields in the last 2 days as Lew brings back memories of October...

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And USA CDS is on the rise (and inverted) once again...

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As we noted previously: [4]

This is what the X-Date projection looks like depending on the best and worst cash in/out scenarios:

[7]

Charts: Bloomberg