NEW YORK- Key US Treasury note yields ticked higher, while yields surged above 7 percent on some bills due for repayment on June 1, the first day that the government might not be able to make payments without a debt ceiling increase.
Investors shunned debt at risk of not being repaid if the US Treasury Department runs out of cash. The yields on bills due on June 1 were last at 7.1222 percent, and briefly got as high as 7.3710 percent. That is up sharply from Tuesday’s close of 5.992 percent. Other bills due on June 6 also rose as high as 7.491 percent.
Democratic US President Joe Biden and top congressional Republican Kevin McCarthy’s negotiators resumed talks that the White House called productive on Wednesday to try to close a deal to raise the $31.4 trillion US debt ceiling and avoid a catastrophic default.
The yield on benchmark two- and 10-year notes edged down in the afternoon after the Federal Open Market Committee released minutes of its May meeting, where the Federal Reserve raised interest rates 25 basis points. The transcript showed agreement among policy makers that the case for further interest-rate tightening had become “less certain.”
The yield on 10-year Treasury notes still ended up 3.8 basis points at 3.736 percent.
“To some extent sellers are just getting exhausted. It might be oversold,” said Kim Rupert, managing director of fixed income analysis at Action Economics in San Francisco.
“The debt limit is certainly creating a lot of anxiety. The June bill spiked over 7 percent today.”
