Rates surged on short-term Treasury bills that may be most indanger of not being repaid if Congress can't reach a compromise tolift or suspend the ceiling on government borrowing.

Treasury Secretary Jacob J. Lew last week moved up by two daysto Nov. 3 the date by which lawmakers must raise the nation'sborrowing capacity to ensure the government can meet dailyexpenses. The rate on bills due Nov. 12 reached the highest sinceMarch.

“That rate is moving as it's the bill that will be most likelyat risk,” said Stanley Sun, a New York-based strategist at NomuraHoldings Inc., one of 22 primary dealers that trade directly withthe Federal Reserve. “We are heading to the final two-week windowfor the timeline the Treasury gave, and if the situation doesn'timprove then this could escalate to surrounding issues.”

The rate on the bill, which began trading in November 2014, roseas high as 0.165 percent, from 0.0325 percent on Oct. 16, accordingto Bloomberg Bond Trader data. At 5 p.m. Monday in New York, ittraded at 0.0725 percent.

Yields on benchmark Treasury 10-year notes fell one basispoint, or 0.01 percentage point, to 2.02 percent, afterdropping six basis points last week, according to Bloomberg BondTrader data. The price of the 2 percent Treasury maturing in August2025 rose 3/32, or 94 cents per $1,000 face value, to 99 25/32.

The rate on one-month bills reached the highest since October2013. That's when lawmakers reached a debt-extension agreement justbefore the Treasury had expected to run out of borrowing authority.Closed-door talks continue between the majority and minorityleaders in the Senate and House, according to several congressionalaides.

The Treasury is using what it calls extraordinary accountingmeasures to stay under the borrowing cap. A cash balance of lessthan $30 billion would probably be depleted quickly, Lew said in anOct. 15 letter to House Speaker John Boehner, as daily governmentexpenditures can be as high as $60 billion.

In 2013, similar wrangling over the debt ceiling sent rates onbills that matured close to the deadline to a two-year high beforea deal triggered a decline. An 11th-hour political agreementallowed President Barack Obama to sign legislation to suspend thedebt ceiling and end a partial government shutdown – - on the veryday Lew then said the government would exhaust its borrowingcapacity.

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