Let’s first reprise the great 2011 debt ceiling showdown. On July 28, just a few days prior to when the Treasury’s borrowing authority would have been exhausted, the yield on the benchmark 10-year UST note stood at 2.98%. And despite months of heated warnings to the freshly elected GOP House majority about its duty to promptly pass a “clean” debt ceiling increase that figure was actually down considerably from the 3.36% yield of early January 2011.
That’s right. As shown below, the whole seven month ordeal on Capitol Hill about the expiring borrowing authority resulted in, well, an irregular but marked decline of the benchmark bond yield.