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The political struggle for debt repayment in the US plummeted to the $ 22tn Treasury market for the first time on Friday, when traders lost short-term loans that stabilized when the US could run out of money.
Yields on Treasury payments matured on October 21, three days after Treasury Secretary Janet Yellen’s declaration of revenue declined, up from 0.07% on Friday to 0.14%, according to Bloomberg sales data.
Later that day other buyers intervened, helping to have a yield of less than 0.1%.
Failure to repay the federal debt by October 18 – when Yellen said the Ministry of Finance will end “special measures” to buy time for lawmakers to take action – could put the US at risk of losing its savings, damaging its debt and potentially leading to financial instability as borrowing increases.
Yields, which move unequally in price or debt, also climbed on other financial books that grew after October 18, including those that would occur on October 26 and 28.
“It’s getting worse,” said Mark Cabana, chief of American operations at Bank of America. “The market starts to go up in price at the risk of a temporary reversal or a lack of expertise within two weeks. This is where we are right now. ”
Friday’s move was partially driven by the passage of continue to make money The U.S. government banned the closure on Thursday, Bret Barker, office manager and TCW, said. Some traders hoped that the increase or suspension of the loan would be consolidated, which did not happen.
“You can see the low-cost sales in late October and early November,” Barker said. “It goes back to the wire. But we are confident that he will pay us back. ”
The Treasury market, which has more than $ 4tn short-term debt, has not been affected by negotiations in Congress to raise the debt. Many brokers and retailers believe that a deal could be reached before the US loses out on debt, in terms of political security.
Fitch’s credit bureau warned Friday that if the debt is not raised on time, the debt crisis could escalate, though its experts believe the Treasure Department has other options for repaying its loans.
“We see it up to Treasure’s [deadline] Without a credit limit it would have been raised as a major factor in the risk of US statesmen wanting to pay, “said Charles Seville, a Fitch researcher.
Republicans have so far refused to sign a bid to raise the debt, forcing Democrats to do the same. Democrats, meanwhile, say there is not enough time to do this without the support of the opposition party.
In a hearing this week, Yellen advocated for a solution for the two groups, adding that they had helped to eliminate all debt.
“Such value is inconsistent with future investments or unplanned tax plans. It is important to pay your debts, “he told members of Parliament Thursday.” Republicans and Democrats need to share this responsibility. “
Federal Reserve chairman Jay Powell also called on lawmakers this week to cancel his debt, saying the US central bank has limits on how to deal with the financial or financial crisis.
Another emergency plan that Fed officials had already moved to in 2013 during another debt crisis was for the central bank to buy loans held at Treasure instead of selling the shares they held. Powell on Tuesday dismissed those tactics, saying “these are things we wouldn’t want to do”.