Treasury bill yield curve. Matthew Boesler/Business Insider, data from Bloomberg Yields on the front end of the Treasury bill curve are blowing out this morning as markets price in higher odds that the disagreement in Congress over raising the debt ceiling will not be resolved in a timely manner.

"The Treasury bill market is clearly indicating concern about upcoming debt ceiling deadlines," said Goldman Sachs economist Alec Phillips in a note last week, when the curve was significantly lower. "In our view this is the direct result of the increasing acrimony in Washington. Starting with the bill maturing on October 17―the day the Treasury Department has suggested it would exhaust its borrowing authority―bill rates are elevated, suggesting lower investor appetite for holding these securities. The distortion in the bill curve is most apparent in the security maturing on October 31, just after Treasury is likely to have depleted its cash balance. This unusual 'humped' pattern is similar to that seen in late July 2011 during the last debt ceiling standoff."

The chart below shows the spike in T-bill yields.