While the politicians and the mainstream media are playing down any concerns about the US debt ceiling, Treasury Bill market participants are seeing chaos as the yield curve has snapped across the Sept-Oct divide with panic-buying in bills that mature ahead of the September-end (Q3-end liquidity needs), and dumping of October bills.
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Ironically, it was precisely the Harvey disaster that prompted Goldman yesterday to lower its odds of a debt ceiling crisis from 50% to 33%, on the assumption that it would make conseratives more agreeable to a compromise, when in fact precisely the opposite appears to have happened, and the new dynamic is now playing out in the market where the odds of a government shutdown have never been greater.