CHART: Here Are Market Signals That People Are Getting Worried About The Debt Ceiling

Stifel Nicolaus head of ETF trading and Strategy Dave Lutz passes along some commentary from Citi on the looming debt ceiling, and how fears over the political gridlock in Washington are starting to seep into fixed income markets.

Yesterday, Citi analysts wrote that “some investors are beginning to avoid maturities that have the potential to receive delayed payments,” saying they “expect these bills to continue to cheapen as the debt ceiling date approaches.”

The analysts were talking about the yield on the 1-month U.S. Treasury Bill, charted below alongside U.S. sovereign credit default swaps.

“[Short rates are] getting sloppier today – even as equities, longer Treasuries, gold, CDS, and VIX contracts are not,” says Lutz. “One thing I have learned over my decades doing this — don’t fight the Treasury market.”

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