investors assess economy amidst debt ceiling talks

U.S. Treasurys rose on Thursday as investors considered what could be next for the economy as debt ceiling negotiations continue and uncertainty about the interest rate outlook intensifies.

At 4:14 a.m. ET, the yield on the 10-year Treasury was up by more than two basis points to 3.7439%. The 2-year Treasury was trading over four basis points higher at 4.3902%.

Yields and prices move in opposite directions. One basis point is equivalent to 0.01%.


TICKERCOMPANYYIELDCHANGE%CHANGEUS1MU.S. 1 Month Treasury5.972%+0.220.00%US3MU.S. 3 Month Treasury5.518%+0.1660.00%US6MU.S. 6 Month Treasury5.432%+0.0370.00%US1YU.S. 1 Year Treasury5.162%+0.0320.00%US2YU.S. 2 Year Treasury4.39%+0.0470.00%US10YU.S. 10 Year Treasury3.744%+0.0250.00%US30YU.S. 30 Year Treasury3.986%+0.0210.00%

Debt ceiling deal negotiations appeared to make progress on Wednesday, fueling hopes that a resolution would be found ahead of the June 1 deadline. A failure to do so could have severe economic consequences, Treasury Secretary Janet Yellen has warned.

Meanwhile, Fitch Ratings agency on Wednesday placed the U.S.’ AAA rating on negative watch, noting that the ongoing debt ceiling debate increased the risk of the government not meeting some of its payment obligations. They do, however, expect a deal to be made in time, Fitch said.

Investors also digested minutes from the Federal Reserve’s latest meeting that were published Wednesday and indicated that officials are split on how to progress interest rate policy. Further rate increases therefore do not appear to be off the table ahead of the central bank’s June policy meeting,

That was in line with comments made by Fed speakers in recent weeks, which have reflected varying views about whether inflation has eased sufficiently to pause or end rate increases, or if more hikes are necessary.

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