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Market Extra: U.S. government and corporations aren’t betting on rates rising much higher

The U.S. government and American corporations don’t appear to be locking in low borrowing costs even as the Federal Reserve dials up interest rates, a sign that the two largest contributors to the economy’s debt binge aren’t anticipating rates drifting much higher from where they presently sit.

The federal government’s recent issuance of short-dated Treasurys, and corporations’ borrowings recently have leaned toward floating-rate debt at the expense of fixed-interest bonds, says John Lonski, chief economist for Moody’s Capital Markets.

“Apparently, the U.S. government senses no pressing need to rush out and lock in recent fixed-rate borrowing costs of between roughly 2.5% and 3% for Treasury notes and bonds,” said Lonski, in a note published Thursday.

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