bond yields were mixed on wednesday as debtceiling concerns lingered and ahead of fed minutes due later in the session yields on shortterm treasury bills were slightly softer on wednesday but remained nearly multiyear highs as concerns about the debtceiling deadline continued to pressure the market for government bonds the 1month treasury yield which has been among those instruments trading of late as a proxy for debtceiling angst eased to 55″ having hit a 20year high of 557 at the start of the week as investors fled government paper signs of stress were evident elsewhere too noted strategists at saxo bank “yesterday’s 21day tbill auction drew 62 in yield the highest in two decades indicating investors are uneasy about the debt ceiling discussions in washington” traders will be keeping an eye out for the federal reserve’s minutes from its may ratesetting meeting due for release at 2 pm eastern markets are pricing in a 673 probability that the fed will leave interest rates unchanged at a range of 50 to 525 after its meeting on june 14 according to the cme fedwatch tool that figure was above 80 just a few weeks ago the central bank is expected to take its fed funds rate target back to 48 by december according to 30day fed funds futures uk government bonds were the notable underperformers on wednesday with 2year yields tmbmkgb02y spiking 216 basis points to 4345 after inflation for april fell to 87 but was more than expected traders are now pricing in a peak bank of england interest rate of 55 compared to 45 currently what are analysts saying “while investors might be worried about a us default another factor behind those treasury declines has been growing skepticism that the fed are actually going to cut rates this year” said jim reid strategist at deutsche bank “indeed only yesterday we got some betterthanexpected data from the us since the flash composite pmi hit a 13month high in may of 545 vs 530 expected then 15 minutes later the data on new home sales for april came in 683k 683000 on an annualized basis vs 665000 expected which was also a 13month high so that added to the signs that the economy was proving resilient as we move deeper into q2 second quarter and helped to push back fears of an imminent recession” he added