Treasuries rise as Obama gives backing to debt ceiling proposals

The US Congress moved one step closer to sealing a deal on its debt ceiling, pushing down yields on 30-year government bonds.

Barack Obama gave his support to a deal proposed by the ‘Gang of Six', a mixture of Democrats and Republicans, which would stabilise US debt by 2014 and stave off further action by ratings agencies already threatening to downgrade.

The plan includes $500bn in immediate deficit cuts and numerous tax reforms with the aim of reducing the nation's debt by $3,700bn over ten years.

Obama's backing led to 30-year government bonds rising while yields fell 10 basis points to 4.18% in New York, the FT reports.

Obama also warned the US was still in the ‘11th hour' prior to the 2 August deadline to avoid debt default and urged Congress to produce a concrete plan before US and international markets begin to react more adversely.