Kicked Can: T-Bills Already Looking Ahead to Next Default Risk.

Earlier I discussed the deal struck between Senate Democrats and Republicans. They kicked the can to February, at which time we will no doubt be privy to yet another vaguely entertaining federal three-ring circus.

However, as I mentioned in my previous article, the public is finally starting to achieve some kind of dim awareness about what’s going on. They are beginning to realize that we have a serious long-term debt problem with no easy solutions. We will not see much action from voters until taxes or inflation become too severe, but this at least means that the political lid has been blown off the issue.

Investors, however, have already begun to act. After the deal this morning was announced, short-dated Treasury Bill yields dropped significantly… but February Treasury Bills are already showing higher repricing in anticipation of the next debt crisis.

tbills

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