Weekly Commentary - Leaving U.S short-term bond is appreciated
Investors had sold billions of dollars in U.S debt, while U.S government’s fiscal standoff was still unresolved. Investors and banks were selling short-term U.S government debt, as they feared that congress and the white house won’t reach an agreement by 17 of October to increase the debt ceiling.
Some large institutions, especially money market funds, have reacted to avoid being stuck in case of the debt default. They have reduced their short-term bond holding, and result in yield of one month Treasure-bill (0.254%) reached higher level than the three-month T-bill (0.06%) and six-month one (0.076%). Economists have warned that a default would ripple through to borrowing costs for American companies, cities, states and other entities. And some foreign leaders have complained publicly about U.S. officials letting the nation approach default.
In the near-term, analysts widely were optimistic about raising U.S debt ceiling, but the case showed political dysfunction of U.S government. Overall, reducing U.S short-term bond was still an appreciated moving in recent.
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