9:08 AM
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Congress approved a debt-limit compromise that prevents a US default, sending the measure to President Barack Obama on the day the Treasury had warned the nation’s borrowing authority would expire. The Senate voted 74-26 for the measure, which raises the nation’s debt ceiling until 2013 and threatens automatic spending cuts to enforce $2.4 trillion in spending reductions over the next 10 years. The House passed the plan yesterday.
Passage ends a monthslong battle over spending that consumed Congress as lawmakers and the Obama administration negotiated to the last days to avert a potential default. Still, the compromise legislation defers decisions on the nation’s finances to a bipartisan panel of lawmakers and may reduce government deficits only modestly while slowing economic growth.
The House voted 269-161 yesterday for the measure, which raises the $14.3 trillion debt ceiling enough to fund the government until 2013 and threatens automatic spending cuts if abipartisan committee doesn’t identify reductions that Congress will accept. For all the anxiety in Washington over the debt debate and averting a default of the nation’s financial obligations, investors with the most at stake made more buying Treasury securities in July than any month this year. They made $183,000 for every $10 million invested.
Investors snapped up Treasuries in the $9.34 trillion market, driving yields on 10-year notes — a benchmark for everything from mortgage rates to corporate debt — to the lowest levels since November. The yield on the 30-year Treasury bond dropped below four per cent for the first time since November. Yields on benchmark 10year notes dropped seven basis points, or 0.07 percentage point, to 2.68 per cent at 11.59 am in New York, according to Bloomberg Bond Trader prices. The 3.125 per cent securities maturing in May 2021 rose 18/32, or $5.63 per $1,000 face amount, to 103 26/32.
Stocks extended losses. The Standard & Poor’s 500 Index fell for a seventh straight day, losing one per cent to 1,273.74 at 11.54 am in New York. The Dow Jones Industrial Average fell 92.82 points, or 0.8 per cent, to 12,039.67.