Odd Lots
Debt-Ceiling Drama Has Some T-Bills Trading Like Junk Bonds
“The least-loved T-bills have discount yields that resemble the effective yields of several short-dated high-yield bonds.”
US House Speaker Kevin McCarthy, a Republican from California, center, speaks to members of the media while arriving to the US Capitol in Washington, DC, US, on Tuesday, May 23, 2023.
Photographer: Nathan Howard/BloombergThis article is for subscribers only.
As the US inches closer and closer to a debt ceiling debacle, some short-term government bonds are trading like junk.
T-bills maturing on June 1 — the so-called “X” or “drop dead” date at which the Treasury is expected to exhaust its borrowing capacity without an increase in the debt limit — are currently yielding more than 6%. That’s more than some corporate bonds sold by junk-rated companies.