Last year's agreement to suspend the U.S. debt ceiling is resulting in some unintended consequences in the market for borrowing and lending Treasuries, as the deal soon expires.

The rate for overnight loans backed by Treasuries in the repurchase-agreement (repo) market plunged Monday to 0.059 percent, the lowest since September 30, as the government issues fewer bills to bring down its cash balance. As part of the agreement, the Treasury needs to bring the balance down to levels that held when the pact was reached in February 2014 to prevent the stockpiling of cash.

'The Treasury needs to get its cash balance down by the mid-March setting of the new debt limit,'' said Michael Cloherty, head of U.S. rates strategy in New York at Royal Bank of Canada's RBC Capital Markets unit. "Given that, they have kept bill supply fairly flat, unlike the typical seasonal rise that occurs in the first quarter. That has contributed to an abrupt slide in overnight repo rates."