Bond Traders Laser-Focused on Washington as Debt-Cap Risks Grow
- Failure to resolve ceiling issues could upend entire market
- Investors in bills and CDS pricing default as a tail risk
The US Capitol in Washington, DC.
Photographer: Tom Brenner/BloombergThis article is for subscribers only.
Treasury traders will be on high alert in the coming week for signs out of Washington on whether the US will careen toward a market-upending default — or will clinch a last-gasp debt deal once again.
The drip-feed of economic data and comments by Federal Reserve officials are poised to take a rare backseat, as the window to raise the debt ceiling closes fast. The Treasury warned Friday that, as of May 10, it had just $88 billion in hand of extraordinary measures — effectively accounting gimmicks — to keep it from crashing into the debt ceiling.