Signs of investor anxiety multiplied on Tuesday, as the U.S. government shutdown stretched into an eighth day and traders jockeyed to profit from wagers on a U.S. debt default. The rate the government pays to borrow for a month rose to its highest level in five years, following a $30 billion Treasury bill auction that Bank of America Merrill Lynch head of U.S. rates strategy research Priya Misra deemed “awful.” The cost of hedging for a year against a possible U.S. default via credit default swaps rose as much as 10%. The price of one-year U.S. CDS has risen 10-fold since Labor Day. More in the Wall Street Journal here.
