Treasury bills are getting hit hard today as the debt ceiling deadline approaches with little signs of an agreement in Congress to raise it.
The chart below shows how the yield on the 1-month T-bill maturing October 31 — which traders are referring to as "Halloween bills" — is blowing out.
In the event that Congress doesn't come to an agreement on raising the debt ceiling by then, October 31 is the day the Treasury is projected to run out of cash, which means holders of those bills wouldn't receive interest payments.
A $30 billion auction of four-week bills that just priced a few minutes ago was pretty ugly. The high yield at the auction was 0.35% — a 2.5 basis point tail — the highest since October 2008.
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