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US Treasury Postpones Next Week's 2-Year Treasury Auction Due To Debt-Ceiling Roadblock
Two days ago we observed that while stocks remain convinced that the upcoming debt ceiling fiasco will go away on its own, the bond market is far less sanguine, as shown by the historic colapse in bids for the latest 4-week Bill auction.
Overnight Goldman released another note, in which it also warned that the "clock is ticking" even if it spun it as optimistically as possible:
- With less than two weeks to go before the Treasury’s projected deadline to raise the debt limit, the outlook for dealing with the issue has finally begun to get a little clearer. The House looks likely to act early next week, with a Senate vote following late next week or over the weekend. If Congress holds to this timetable, it suggests a debt limit increase will be signed into law by the November 3 deadline, though probably with little time to spare.
- So far, financial markets appear mostly unfazed by the uncertainty. That said, over the last couple of days some signs of modest unease with the situation in Washington have appeared. Most notably, the yields on Treasury bills that mature around the debt limit deadline have risen, even while yields on securities maturing later in the year have not.
- Overall, our sense is that while there is a good deal of uncertainty regarding the outlook for the debt limit, the issue is likely to pose less of a perceived risk than the prior debates in 2011 and 2013. So while there are some signs of nervousness in the market related to the debt limit, it seems unlikely that the issue will be quite as disruptive as it was in previous years.
However, moments ago the US Treasury promptly removed any latent optimism that this latest debt ceiling crisis will somehow be magically fixed on its own after it announced that it would postpone the two-year note auction previously scheduled for Tuesday, as the impasse over the debt limit constrains the nation’s borrowing.
“Due to debt ceiling constraints, there is a risk that Treasury would not be able to settle the two-year note” on Nov. 2, the Treasury said Thursday in an e-mailed statement as reported by Bloomberg.
Curiously, the five-year note auction, scheduled to take place on Oct. 28, and the seven-year note auction, scheduled to take place on Oct. 29, will proceed as planned, at least for now. Both sales will settle on Nov. 2, the department said.
U.S. Treasury Secretary Jacob J. Lew on Wednesday reiterated that the government on Nov. 3 will exhaust the tools it’s using to stay under the cap. He urged Congress to act now to increase the U.S. debt limit, calling it irresponsible for lawmakers to use political brinkmanship that could jeopardize the government’s record of honoring its obligations.
Finally, recall that the House is expected as early as Friday to vote on a conservative debt-limit proposal even though chances are slim that the plan can pass the Senate. Speaker John Boehner (R-Ohio) told the GOP Conference on Wednesday that he is expecting a vote on the Republican Study Committee (RSC) plan that would raise the debt limit to $19.6 trillion from $18.1 trillion and would run through March 2017.
Which, incidnetally is precisely how this latest theater will end: with the US getting its Treasury limit boosted to just shy of $20 trillion, buying the US government enough time until early 2017 when the farce repeats again.
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Ironic, considering the private losses of Goldman were forced onto the taxpayers when they became a bank...
roll the motherfucking guillotines already, nothing changes otherwise.
"debt ceiling?"
pfft
sell the treasurys anyway
what are they going to do, arrest you?
treasurys keep the country going. everybody knows that. even congress.
hugs,
timmy
"sell the treasurys anyway
what are they going to do, arrest you?"
Wrong question imho. More to the point, how long can the U.S. government pretend that some of the world’s sickest economies supposedly have nothing better to do with their economic output than to lend money to the U.S. government – at no interest? Japan and Belgium come to mind.
"Countries around the world are selling their U.S. government debt holdings this year by the largest amounts seen since at least 2000.
China has been selling U.S. debt but it’s not alone. Lots of emerging market nations like Brazil, India and Mexico are also selling U.S. Treasuries. Not that long ago all these countries were huge buyers of U.S. debt, which is viewed as one of the safest places to park money…
Foreign governments have sold more bonds than they have bought for ten consecutive months through July 2015, the most recent month of available data from the Treasury Department. " -
U.S. Treasuries: The Big Dump BeginsGuess times running out.
Exactly. Printing FRNs in Monopoly Money colors was a nice touch.
Anyone who shows up at these auctions for these Madoff promisary notes should be lined up and shot in the head.
Remember that weekend as well. Was done quietly on a weekend.
Hank Paulson's original intention was to have Goldman acess unlimited taxpayer money.
Save the criminals at all costs, rather then having them go into receivership.
Yes, the greatest theft in all of human history. be positive, someday we will all get a piece of goldman. such "let the majority eat cake" monetary experiments have been tried before.
if there is a debt ceiling constraint, why does the national debt keep rising
http://www.usdebtclock.org/
(that pesky usury interest)
Exponentially.
This is the official one.
http://www.treasurydirect.gov/NP/debt/current
Been stuck at the current level for months. When they raise the ceiling...it will catch up to the clock.
Engineered default?
And they called "strategic defaults" by people who were sold predatory loans "unpatriotic"
Raising the debt limit - that always makes me smile.
The time will come when it will take a HFT system to press the button to raise the debt ceiling, because it will have to be done so often that no human finger will be able to press the button fast enough.
So there will need to be some massive 'event' or distraction that occurs so the ceiling can be raised between now and 1st week of november.
S&P's are soaring with the dollar this morning but gold remains firm for now, which is interesting and bullish for gold. Not looking to buy gold, yet, but my sentiments are starting to tilt toward the long side, short term. If it gets slammed later this morning, I'll be buying the gold for a trade.
Burn down the corrupt American Financial System...of social losses and private profits for the Wall Street Mega Banks. WTF are we paying savers ZERO PERCENT INTEREST while the rescued banks pay million dollar bonuses?
BENGHAZI! Emails! First things first. Greenpeace is aborting baby Harp seals funded by non birth certificated Kenyans, in KANSAS, performed by illegal Mexicans!
Oh shit. Who took all my money and gave me this funny colored toliet paper?
So you come home to find your sewer backed up to the top of the stairs do you, A) Raise the ceiling in your basement or B) Pump the sh*t out?
"....that could jeopardize the government’s record of honoring its obligations."
Yeah, right! How about its obligation to work within a budget and not run a fucking multi-trillion dollar defecit? Huh? Did they forget about that one? Fucking fucks.
the walls are closing in...
"that would raise the debt limit to $19.6 trillion from $18.1 trillion and would run through March 2017."
Aww shucks. I figured Boehner and the Boyz would tack on another $2 Trillion before he left. Go Big and Go Home! That's +8.29% over the next 1.5 years. That ought to keep the banksters at bay. Meanwhile, where are the savings accounts paying 5.53% per year?