TREASURIES-Benchmark 10-year yields edge down as debt ceiling talks march on

·3 min read

By Chuck Mikolajczak

NEW YORK, May 24 (Reuters) - The benchmark U.S. 10-year Treasury yield edged lower while the one-month yield climbed to a record for a second straight day on Wednesday as the focus remained on any signs of progress in talks to raise the debt ceiling.

Negotiators for Democratic President Joe Biden and top congressional Republican Kevin McCarthy were set to resume talks to raise the $31.4 trillion debt ceiling on Wednesday morning as they attempt to dodge a catastrophic default.

The yield on one-month bills hit another record high of 5.892%, as concerns about payments coming due when the Treasury is most vulnerable to running out of money keeps investors away. The yield was last up 1.9 basis points to 5.629%.

"Inside a month you see yields going up, and that makes sense in terms of it is not really showing people’s conviction in terms of what is going to happen, it’s more people don’t want to be bothered, they just move away and go elsewhere," said Jim Barnes, director of fixed income at Bryn Mawr Trust in Berwyn, Pennsylvania.

"But beyond that you are not really seeing any material impact, there are other things with economic data, monetary policy that seems to be more directional as opposed to any material influence at this point from the debt ceiling."

The yield on 10-year Treasury notes was down 0.2 basis points to 3.696%.

Recent comments from Federal Reserve officials have fueled some uncertainty about whether the central bank will pause its rate hiking cycle at its mid-June meeting, indicating officials are not in unison about the path of Fed policy.

The Fed will release the minutes of its most recent meeting at 2 p.m. EDT (1800 GMT).

Expectations for another 25 basis point hike from the Fed at its next meeting have edged up recently and are currently at 34%, up from 28.1% on Tuesday, according to CME's

FedWatch Tool


The yield on the 30-year Treasury bond was

down 0.3 basis points




More supply will come to the market on Wednesday when Treasury auctions $43 billion in 5-year notes. Treasury saw strong demand for a $42 billion sale of two-year notes on Tuesday, which sold at a high yield of 4.30%.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a negative 61.4 basis points.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 2.3 basis points at 4.306%.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.236%, after closing at 2.234% on Tuesday.

The 10-year TIPS breakeven rate was last at 2.286%, indicating the market sees inflation averaging 2.3% a year for the next decade.

(Reporting by Chuck Mikolajczak, editing by Deepa Babington)