NEW YORK (Reuters) – A measure of the cost of securing exposure to US government debt fell Tuesday as Democratic President Joe Biden and top Congressional Republican Kevin McCarthy moved closer to a deal to avoid a default.
Spreads on US one-year credit default swaps, market-based measures of default risk, fell from 164 basis points on Monday to 155 basis points, according to data from S&P Global Market Intelligence.
Five-year CDS spreads narrowed to 69 basis points from 72 bps on Monday.
Investor jitters over a possible US default have increased in recent weeks as the deadline for raising the government’s borrowing ceiling comes closer than many in the market had expected.
A closely watched meeting on Tuesday between President Biden and Speaker of the House of Representatives McCarthy ended on an optimistic note, with the White House describing the meetings as “productive and direct.”
(Reporting by Davide Barbuscia; editing by Leslie Adler and Deepa Babington)
