LONDON, May 29 (Reuters) – The cost of a guarantee against short-term default risk by the United States on its debt fell on Monday, reflecting some optimism among investors following a tentative agreement on raising the debt ceiling.
Six-month CDS (“credit default swaps”) on US debt, financial instruments used by some investors as insurance against the risk of non-repayment of government bonds, fell to 199 basis points, according to the data from S&P Global Market Intelligence. They were over 200 at the end of last week.
After weeks of tense negotiations between the White House and Republicans, it is now up to Congress, where each party tightly controls one chamber, to approve this tentative deal by June 5 – the date from which, according to the US Department of Treasury, the federal government may no longer be able to make payments.
In a sign of some caution in the markets, five-year CDS rose to 59 basis points, up two points from Friday’s close, according to S&P data.
The exchanges are however limited in the absence of a large part of the investors, this Monday being a public holiday in several European countries and in the United States. (Dhara Ranasinghe, French version Laetitia Volga, edited by)
2023-05-29 09:15:04
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