Rates & Bonds 3 MIN READ

1-month Treasury yields rise from Oct. lows as debt ceiling worries grow

April 24, 2023By Reuters

One-month Treasury yields rose from their lowest levels since October on Monday as investors appeared to grow increasingly concerned about a potential standoff over the US debt ceiling.

The yield of the one-month Treasury, which started the month near 4.7%, gained 9 basis points to 3.45%. Three-month Treasuries, meanwhile, fell 6 basis points to 5.05%, roughly in line with where they were trading in mid-April.

Bond yields move in the opposite direction of prices.

“People are focusing increasingly week-to-week on the summer and the debt ceiling deadline, and that is increasingly impacting what could be some idiosyncratic moves in the Treasury market,” said Fran Rodilosso, head of fixed income ETF portfolio management at VanEck. “There’s a growing sense that there’s not a lot of common ground this time.”

US tax collections are currently trending roughly 30% below last year’s level, raising the possibility that the United States will reach its borrowing limit as soon as the first half of June rather than later in the summer, according to Goldman Sachs Global Investment Research.

The House of Representatives is expected to vote on a Republican-led debt and spending bill this week.

Market concerns over a debt default pushed the price of insuring Treasury debt through credit-default swaps to their highest levels in over a decade last week.

The yield on 10-year Treasury notes was down 5.7 basis points to 3.515%, while the yield on the 30-year Treasury bond was down 4.9 basis points to 3.729%.

The Chicago Fed National Activity Index slipped 0.19 in March, the same decline it posted in February, and slightly above market expectations for a 0.20 decline. The April reading of the Dallas Fed Manufacturing Index, meanwhile, was -23.4, nearly double the -12.0 economists were predicting and down from -15.7 in March.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at -62.8 basis points.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was down 4.9 basis points at 4.142%.

April 24 Monday 3:37PM New York / 1937 GMT

  Price Current Yield % Net Change (bps)
Three-month bills 4.925 5.0529 -0.064
Six-month bills 4.8425 5.0433 -0.020
Two-year note 99-129/256 4.1436 -0.046
Three-year note 99-196/256 3.8339 -0.062
Five-year note 100-24/256 3.6036 -0.061
Seven-year note 100-102/256 3.5593 -0.061
10-year note 99-224/256 3.5147 -0.057
20-year bond 100-68/256 3.8554 -0.052
30-year bond 98-32/256 3.7295 -0.049
Last (bps) Net Change (bps)  
US 2-year dollar swap spread 27.00 0.00  
US 3-year dollar swap spread 18.25 1.00  
US 5-year dollar swap spread 7.50 0.00  
US 10-year dollar swap spread -0.50 -0.25  
US 30-year dollar swap spread -41.00 -0.25  

(Reporting by David Randall; editing by Jonathan Oatis and Kirsten Donovan)

This article originally appeared on reuters.com

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