Investors are worried about the debt ceiling debate in Washington. Stocks have wobbled all week, halting their recent A.I.-induced rally, and yields on one-month Treasury bills—which mature around the time the government could default on its debts in June—topped 5.6% Wednesday, the highest level since before the Global Financial Crisis in 2007.
It’s a sign that traders are shunning government bonds owing to serious concerns about a potential U.S. debt default. Treasury Secretary Janet Yellen has warned that as soon as June 1, the so-called X date, the U.S. government could run out of money and economic “catastrophe” may follow. But Libby Cantrill, a managing director and head of public policy at Pimco, still believes lawmakers will make a deal and avoid that worst-case scenario.
