Treasury Yields Fall on the Back of Debt Ceiling Vote

U.S. Treasury bonds declined on Wednesday as investors grew concerned about the impending debt ceiling bill, on which the House of Representatives was set to vote later in the day. Additionally, market participants eagerly awaited crucial jobs data. The yield on the 10-year Treasury was trading 4 basis points lower at 3.654%. The 2-year Treasury yield was last down by more than 3 basis points at 4.436%.

Anxiety surrounding the Fiscal Responsibility Act persisted as it has the potential to raise the U.S debt ceiling and prevent a government default as early as June 5. The bill cleared a significant hurdle on Tuesday by securing a 7-6 majority vote in the House Rules Committee. 

As per the tentative House voting schedule, it is expected to be presented before the House floor on Wednesday. However, even if the bill passes the House vote, it will still require approval from the Senate to be enacted into law.
The compromise reached between President Joe Biden and House Speaker Kevin McCarthy has faced criticism from politicians on both sides of the aisle. On Tuesday, at least 20 Republicans declared their intention to vote against the bill.

At the same time, investors have anxiously anticipated the release of the JOLTs job openings report for April. The report could provide valuable insights into the state of the economy and influence the Federal Reserve's upcoming interest-rate policy decision.

In recent weeks, uncertainty has grown regarding whether the central bank will stop or continue its campaign of raising interest rates at its June policy meeting.