D.C.’s showdown hits Treasury-bill yield, economic confidence

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thCAYW0SPRThe yield on 1-month Treasury bills dropped this week once U.S. lawmakers decided to pay the country’s bills, reopen the government and send hundreds of thousands of federal workers back to the office. Yields /quotes/zigman/4868265/delayed 1_MONTH -67.21%  had jolted higher during the extended debates in Washington, with investors’ confidence shaken on whether elected officials would lift the debt ceiling in time.

Congress finally approved a deal, but not before Fitch Ratings put the U.S. AAA credit rating on negative watch. Despite some public hand wringing over the political divisions that have the U.S. lurching from crisis to crisis, it seems clear that fierce partisan battles aren’t over for this Congress. Consumed by a quest to roll back President Barack Obama’s health-care reform, Texas Republican Sen. Ted Cruz recently declined to rule out another shutdown.

Obamacare’s implementation has been sloppy, but closing the government this month was a punishing exercise that by one estimate robbed the U.S. economy of $24 billion, and alarmed international partners.

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Investors weren’t the only parties concerned about the embattled talks in Washington. A gauge of economic confidence among U.S. adults dropped in the week that ended Oct. 13, about two weeks into the government shutdown, according to data from polling firm Gallup. The gauge fell five points to negative 39 in the latest weekly reading, the lowest level since late 2011, when confidence was weak following protracted negotiations on the debt ceiling.

A minimum reading of negative 100 would be reached if all respondents said the economy was “poor and getting worse,” while a maximum of 100 would be hit if all respondents said the economy “was excellent or good and getting better,” according to Gallup. Gallup’s gauge was based on interviews with more than 3,500 adults throughout the U.S.

Economists worry when they see weak confidence readings among consumers, who are the backbone of the U.S. economy.

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— Text and charts by Ruth Mantell