A couple of bill auctions were announced this Thursday for the beginning of next week and the sales would close on June 1, the date on which the Government would run out of funds to cover debts.
the treasure of The United States announced this Thursday a couple of auctions of letters for early next week, which some traders see as an indication that the “D-Day” of the debt ceiling may not, in fact, be June 1. The Treasury Fiscal Management Office said it would auction $119 billion in 3- and 6-month bills next Tuesday, May 30.
The sales would formally close two days later, on June 1. That is the date that the Secretary of the Treasury, Janet Yellen, has repeatedly indicated as a possible limit for the Government to run out of funds to cover all its obligations.unless a deal is reached between the White House and congressional Republicans to lift the $31.4 trillion debt ceiling.
According to research firm Wrightson ICAP, the agency would not normally announce an upcoming sale “until it is certain it has room under the debt ceiling for the new titles.”
Looks like there’s more cash
Gennadiy Goldberg, a senior rates strategist at TD Securities in New York, said the fact that the Treasury proceeded with the announcements “suggests that you probably have cash to settle the security. They have suggested in the past that they would not advertise for auctions that they did not believe they had the means to close. So I think that’s a positive.”
“But,” Goldberg continued, “that’s where the positivism really ends because we really know that it is very likely that in the first two weeks of June the Treasury will run out of cash“.
Despite Yellen’s comments, most Wall Street firms estimate that the date the Treasury will finally run out of margin under the extraordinary measures it has employed for months to stretch its borrowing capacity is more likely between June 6 and 9.
President Joe Biden and Republican Congressman Kevin McCarthy seemed closer to a deal on Thursday to cut spending and raise the public debt ceiling with little time left to avoid the risk of default.
Source: Ambito
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