treasury yields finished mostly higher on friday handing the policysensitive 2year rate its biggest weekly rise in almost eight months as traders assessed the latest remarks made by federal reserve chairman jerome powell meanwhile the 2month tbill rate soared on news of a delay in negotiating a debt ceiling deal in washington financial markets reacted to a mix of comments on friday from fed chair powell and us treasury secretary janet yellen as well as reports that debtceiling negotiations had stalled in washington while republican rep garret graves of louisiana a key ally of house speaker kevin mccarthy described the talks as being at a pause cnbc reported that republicans had walked out an unnamed white house official said that there are real differences between the parties on budget issues and talks will be difficult the debtceiling issue overrode remarks made by powell who said on friday that the benchmark interestrate target range might not need to rise as much as it otherwise would because banks are tightening credit he also indicated that fed officials havent made any decisions about whether more rate hikes will be appropriate and said that progress in bringing down inflation will be slow eyparthenon chief economist gregory daco interpreted powells comments as implying a hawkish hold  in other words a pause accompanied by the need to keep an eye on inflation markets reduced the likelihood of a june fed rate hike to 145 from 356 on thursday according to the cme fedwatch tool fed funds futures traders now see an 855 likelihood that the fed will keep borrowing costs between 5 and 525 next month meanwhile yellen told bank chief executives that more mergers may be necessary according to a report from cnn her comments raised the prospect that more regional banks would have to be bought by larger toobigtofail firms  which caused the kbw regional bank index xxkrx to slump what analysts are saying in the week ahead investors in the us rates market will continue following the progress of a debtceiling deal as the treasury department aspires to avoid missing a payment said bmo capital markets strategists ian lyngen and ben jefferythe feds biggest challenge this year wont be executing another quarterpoint increase in policy rates to a higher terminal rate rather it will be mustering the conviction to hold the endpoint into 2024 as monetary policy makershave been signaling they said in a note this content was created by marketwatch which is operated by dow jones  co marketwatch is published independently from dow jones newswires and the wall street journal