Money-market funds have been luring savers with yields that can beat many bank deposit account rates, and the resolution of the debt-ceiling drama might increase the appeal of these mutual funds, experts say.Money-market funds have been luring savers with yields that can beat many bank deposit account rates, and the resolution of the debt-ceiling drama might increase the appeal of these mutual funds, experts say.
For T-bill yields, “the level is priced-in in the market already in anticipation of that supply,” he said.How the debt-ceiling deal could impact yields Last week, the House of Representatives and the Senate passed legislation raising the debt ceiling for two years while capping and cutting other costs. President Joe Biden signed a bill that temporarily suspends the U.S. government’s $31.4 trillion debt ceiling.
More high-yielding T-bills in the mix might push up fund yields by “a few basis points,” he estimated. In the wake of the debt-ceiling increase, the Treasury Department needs to replenish its accounts. It is expected to do that by issuing a wave of short-term debt that could total around $1.4 trillion through the end of the year, according to estimates from BofA Global strategists BAC . Some $1 trillion of the debt from Treasury bills could be issued before the end of August, the analysts said.