The U.S. debt ceiling crisis continues, and short-term U.S. Treasury yields are rising.

As the United States faces the latest debt ceiling crisis, market pressure has become evident in the $6.4 trillion U.S. Treasury market, especially in the fluctuations of short-term Treasury bill (T-bill) yields, reflecting investors' concerns about the possibility of payment delays by the U.S. government. Currently, the rise in U.S. Treasury yields is particularly pronounced, especially for the short-term Treasury bills maturing in July and August, as their yields are climbing. This indicates skepticism in the market about whether the U.S. government can timely raise or suspend the debt ceiling. The current total U.S. debt has reached $36.1 trillion, and if Congress fails to reach a consensus on the debt ceiling soon, the U.S. government's payment ability may be affected. Since the debt ceiling was reached in January this year, the U.S. Treasury has started implementing "extraordinary measures" to use other funding sources to maintain government operations. However, these measures can only provide a limited buffer period, meaning that the countdown to funding depletion has begun. The "X date" (the final deadline when the U.S. government may be unable to fulfill all payment obligations) that market participants are closely watching has become the market focus. The changes in the short-term Treasury bill market indicate that investors anticipate that the debt ceiling dispute may continue until the last moment. Lawrence Gillum, Chief Fixed Income Strategist at LPL Financial, pointed out in a client report on Tuesday that Treasury bill yields near the "X date" are significantly higher than yields on other terms, indicating that the market is factoring in a certain risk premium. Gillum stated in the report, "While we believe Congress will eventually take action, whether by raising, suspending, or even canceling the debt ceiling, this 'political tug-of-war' will cause market volatility during this period." Currently, the short-term Treasury bill yields most affected by the "X date" have risen to 4.35%-4.38%, a few basis points higher than surrounding term Treasury bills, further reflecting market risk pricing. Additionally, according to FactSet data, the 3-month Treasury bill yield is 4.28%, and the 1-month Treasury bill yield is 4.29%, indicating a clear upward trend in short-term Treasury bill market yields. Bond prices and yields have an inverse relationship, and the rise in short-term Treasury bill yields indicates a decrease in investor confidence in the U.S. bond market, as they are reluctant to hold bonds affected by the debt ceiling. At the same time, many investors still prefer to hold short-term Treasury bills rather than turn to higher-risk assets. This phenomenon is referred to in the market as "T-bill and chill" - meaning investors are more willing to hold U.S. bonds rather than venture into the more volatile stocks or high-yield bond markets. This trend has been reinforced by recent policy signals from the Federal Reserve. The Fed has explicitly stated that it is not in a hurry to further lower interest rates in the face of unclear inflation conditions. Although the Fed has lowered rates by a cumulative 100 basis points since last year, bringing the policy rate to a range of 4.25%-4.50%, the current attractive yields on short-term Treasury bills compared to the close to 5% T-bill yields of previous years.