Credit-default swaps insuring against losses on U.S. Treasuries almost doubled last week to 64 basis points for one- year, according to data provider CMA, which is owned by McGraw- Hill Financial Inc. and compiles prices quoted by dealers in the privately negotiated market. A basis point equals $1,000 annually on a contract protecting $10 million of debt.

There are now 886 contracts covering a net $3.4 billion of debt, the most since March and up from an almost three-year low of $3.1 billion on Sept. 20. That compares with $13.1 billion of protection on German bunds and $16.9 billion on Italy, where one-year swaps contracts are priced at about 100 basis points.

Bill Yields

Rates on the $93 billion in Treasury bills that mature Oct. 24 increased to 0.13 percent on Oct. 3 after touching negative 0.01 percent on Sept. 27. Rates on the $120 billion of bills maturing Oct. 17 advanced to 0.12 percent on Oct. 4 after falling to negative 0.01 percent on Sept. 17. Those rates reached 0.14 percent on Oct. 1, the highest since December.

Rates on one-month bills exceeded 0.18 percent in July 2011 as the U.S. was in jeopardy of defaulting because lawmakers wanted cuts to spending before raising the debt ceiling.

While bill rates are rising amid concern the government may not repay the debt on time, longer-term Treasury yields are falling as investors seek safety in case such a scenario upends financial markets.

‘Negative Scenarios’

“The market is pricing in a lot of negative scenarios right now,” said Gary Pollack, who manages $12 billion as head of fixed-income trading at Deutsche Bank AG’s Private Wealth Management unit in New York, in a telephone interview Oct. 3. “The day we have a more positive scenario, we could see higher yields, maybe 2.75 percent to 2.8 percent” on 10-year yields as investors see less of a need for safe assets, he said.

U.S. gross domestic product expanded at a 2.5 percent pace in the second quarter, compared with 1.1 percent in the previous three-month period, Commerce Department figures showed Sept. 26. Unemployment was 7.3 percent in August, according to the Labor Department. The September jobs report scheduled for Oct. 4 was delayed because of the shutdown.

Policy makers have said they won’t consider raising interest rates as long as unemployment exceeds 6.5 percent and inflation isn’t more than 2.5 percent. The personal consumption expenditures deflator, the Fed’s preferred gauge of inflation, increased 1.2 percent in August from a year earlier.