T-Bills Show Wariness About Default Even as Debt Ceiling Talks Progress

Treasury bill markets are a long way from sounding the all-clear about the risk of a US default despite the emergence of a more positive tone in negotiations over the statutory debt ceiling between the White House and Congressional leadership.

Securities due in early June — seen as most at risk of non-payment if the US government exhausts its borrowing capacity in the time period Treasury Secretary Janet Yellen has warned about — continue to include a significant yield premium as investors steer clear. Rates on some of those maturing in the early part of the month topped 6% on Tuesday, which is not only above those for later in the summer, but close to 4 percentage points above instruments maturing May 30. Earlier, the Treasury sold its newest 21-day cash management bill at 6.2%.