This is a syndicated repost courtesy of Snakehole Lounge- Online Course Notes for Financial Markets. To view original, click here. Reposted with permission.
Between The Federal Reserve FINALLY normalizing interest rates and the constant friction in Congress over the Federal budget and debt ceiling, the Treasury market seems dazed and confused.
(Bloomberg) — The spread between 1- and 3-month Treasury bills touched -1.93bp as anxiety surrounding the debt-ceiling deadline increased; spread currently at ~0.873bp.
Treasury reiterated in its refunding statement it expects to be able to fund the government through the end of February,
Increases in coupon supply will “eat into available borrowing authority and will further limit bill issuance until the debt ceiling is raised,” Jefferies economist Thomas Simons says in note.
Liquidity moves markets!Click here to learn how you can follow the money.
Yields on Treasury bills maturing March 1 rose by 1.1bp to 1.439%, whileMarch 8 securities were little changed at 1.369%; the rate on March 15maturities was little changed at 1.339%
Barclays strategists said in weekly note that yield on March 1 bill could rise to 1.50% or more as budget negotiations drag on
Will Congress expand the statutory debt limit yet again? Of course! Notice the speed at which the debt ceiling has been raised after the last two recessions.
Both Congress and The Federal Reserve suffer from a communiction breakdown.
Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I am a contractor for Money Map Press, publisher of Money Morning, Sure Money, and other information products. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases I receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.