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U.S. Treasury bill rates jump on debt ceiling concerns
January 24, 2014 / 4:41 PM / 4 years ago

U.S. Treasury bill rates jump on debt ceiling concerns

NEW YORK, Jan 24 (Reuters) - U.S. Treasury bill rates jumped on Friday on concerns that Washington won’t raise the government’s $16.7 trillion statutory borrowing limit in time before it is expected to be exhausted by early March.

In October, Congress and the White House suspended the borrowing cap until Feb. 7. If the debt ceiling isn’t raised by then, Treasury will be able to juggle money between government accounts for a few weeks to keep just under the new limit.

On Friday, Patty Murray, a top Democrat senator, said her party will not negotiate with Republicans to raise the debt ceiling in exchange for concessions.

As risk grew that repayment on T-bill issues due in late February to mid-March might be delayed without a debt deal, investors reduced their holdings of these issues. This catapulted the interest rates on these ultra-short-dated debt to their highest since October during the previous debt ceiling showdown.

The interest rate on T-bills due March 6 traded as high as 0.10 percent before moving down to 0.08 percent. It ended at 0.03 percent on Thursday.

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