Traders briefly send the one-month T-bill rate plummeting by more than half of a percentage point on Thursday.
Traders piled into the 1-month Treasury bill on growing concerns about a debt-ceiling standoff Thursday, sending the bill’s rate briefly plummeting by more than half of a percentage point.The 1-month rate BX:TMUBMUSD01M touched an intraday low of 3.215%, down as much as 53.4 basis points from Wednesday’s closing level of 3.749%, according to Tradeweb. Its decline was subsequently pared to 21.8 basis points, leaving the rate at 3.531% as of 1:30 p.m.
The moves came amid growing concerns that “the debt-ceiling crisis has been elevated,” according to Tom di Galoma, managing director and co-head of global rates trading at BTIG LLC. Concerns about the U.S. debt ceiling have driven spreads on credit-default swaps, an instrument that can be used to insure against the risk of default, to their widest in more than a decade. Meanwhile, JPMorgan analysts said that, after meeting with around 1,000 attendees and 1,600 virtual participants at the IMF/World Bank spring meetings, “outlier” views are as high as 35% that the U.S. will default on Treasury obligations.
“Everyone is piling into the shortest bill possible, thinking that’s the safest instrument to be long in, given the fact that the debt ceiling is on wobbly ground,” di Galoma said via phone.
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