Treasury Yields Jump: Not Only Is Default Devastating. The Threat Of Default Is Too

"Yields on the shortest-term Treasury securities rose sharply on Tuesday to the highest level in nearly five years amid signs that no deal was imminent on Capitol Hill ending the U.S. budget showdown. In late-afternoon trading, bills that mature on Nov. 7 yielded 0.380%, the highest one-month yield reached since October 2008. Yields on Treasury bills maturing on Oct. 17 and Oct. 31 hit as high as 0.395% and 0.550%, respectively. Some large investors including banks and money market funds have indicated they are shying away from issues maturing in the next month, amid fears of a U.S. default...Treasury received fewer orders for each dollar of debt issued in two simultaneous auctionsTuesday--for $35 billion of three-month bills and $30 billion of six-month bills--than in previous auctions. The so-called bid-to-cover ratio fell in both auctions, reflecting the decision of many investors to avoid debt they believe could be hit in a potential U.S. default." Carolyn Cui in The Wall Street Journal.