© Reuters. FILE PHOTO: U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration
NEW YORK (Reuters) – A measure of the cost to insure exposure to U.S. government debt declined on Tuesday as Democratic President Joe Biden and top congressional Republican Kevin McCarthy edged closer to a deal to avoid a debt default.
Spreads on U.S. one-year credit default swaps, market-based gauges of the risk of a default, declined to 155 basis points from 164 basis points on Monday, according to S&P Global (NYSE:) Market Intelligence data.
Spreads on five-year CDS decreased to 69 basis points from 72 bps on Monday.
Investor jitters around a possible U.S. default have intensified in recent weeks as the deadline to raise the government’s borrowing cap looms closer than what many in the market had anticipated.
A closely-watched meeting on Tuesday between President Biden and McCarthy, the speaker of the House of Representatives, ended on an upbeat note, with the White House describing the meetings as “productive and direct.”
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