The last-minute deal to raise the debt limit averted a U.S. default, but it risks making brinkmanship over federal borrowing a seasonal event as lawmakers wage fiscal war in Washington. The agreement now awaits President Joe Biden's signature just before a June 5 default deadline, capping weeks of bitter negotiations that strained Treasury markets.

It will cost taxpayers as investors absorb a new normal.

The United States has had an extraordinary ability to borrow at low cost because global financial markets treat Treasury securities as the benchmark for risk-free debt. Yet at points in May, in the heat of the negotiations, investors demanded yields surpassing 7 percent on Treasury bills maturing around the projected default date, treating them as similar to junk debt.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including and

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.