Cash flow slowdown boosts U.S. T-bill yields
The short-term debt instrument market in the United States is facing increasing pressures due to a slowdown in cash fund inflows, leading to a rise in U.S. Treasury bill yields. Inflows into these funds totaled $158 billion during the first nine months of the year, compared to approximately $823 billion in 2025 and $840 billion in 2024. This decline in demand has caused yields to increase, especially for 3- and 6-month Treasury bills, with spreads over swaps reaching their highest levels in years. This is driven by investors demanding higher returns in exchange for holding short-term bonds. It reflects growing uncertainty regarding the path of interest rates, with expectations that the U.S. government will issue more short-term debt instruments in the final quarter. Such developments could put additional pressure on funding conditions and drive yields higher, potentially impacting market conditions and the costs of short-term financing.
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