Projected Treasury August Daily Cash Sweep Balance

Tyler Durden's picture

We posted this on Friday, but with the Norway news and all the headline distractions from Congress, many may have missed it, so here it is again. Stone McCarthy (one of the very best rates shops on Wall Street) has compiled the daily projected cash flow balances for the US Treasury. Here it is.

And their commentary:


At this point, we expect Treasury to have less cash in early August than we thought previously.

In mid May, for instance, we thought Treasury would open the day on August 2 with cash of about $85.0 billion. (See Chart of the Day: Imagining an August Without Borrowing, 5/20/11.)


The main reason for the lower cash balance is that Treasury has been issuing much less in bills than we had been expecting. In retrospect, we should have paid more attention to our own forecast that Treasury wouldn't be able to settle the July 2-, 5- and 7-year notes on August 1, without violating the debt limit. In late April, for instance, we projected that the settlement of those auctions would cause Treasury to violate the debt limit by about $24.0 billion.


What Treasury has done is to keep bill auction sizes lower than it would have otherwise to accommodate the settlement of those auctions, which were announced today and kept at their recent sizes. We think that explains the $4.0 billion cut in the 52-week bill announced today. Once the debt limit is increased, we think the Treasury will be ramping up bill auction sizes pretty aggressively. We will discuss that in more detail next week in our projections of Treasury borrowing needs for the next two quarters.


The table above summarizes our cash flow projections for the first two weeks of August, assuming that there has been no increase in the debt ceiling. The projections assume that Treasury will be able to at least roll over maturing debt on August 4, 11 and 15. That's probably becoming a more questionable assumption given all of the statements coming from the rating agencies. As the table shows, we now show Treasury with a negative cash balance of $15.5 billion on August 15, which implies that Treasury wouldn't have the resources to pay $30.6 billion in interest on that day.


If our projections are fairly accurate at this point, we still think the Treasury has enough options available to scrape together the extra cash to make the interest payment. Treasury has provided less detailed information than we would like on how much of its extraordinary measures it has used to create borrowing authority. Last Friday, Treasury announced that it would suspend the reinvestment of securities issued to the Exchange Stabilization Fund, and that by doing so, it was using the "last of the four previously announced measures available to keep our nation under the statutory debt limit."

Where can Tim Geithner squeeze a few last pennies from?

Again, Treasury hasn't been all that explicit about how much of each option has been used. But we're going to assume that, by August 2, it will have used all of the borrowing authority created by measures related to the Civil Service Retirement and Disability Fund, the G-Fund, and the Exchange Stabilization Fund. That would leave $5.0 billion that could be created by redeeming the remaining $5.0 billion in bills in the Supplementary Financing Program Account. An announcement regarding SFP could come on Monday.


Treasury could also replace some Treasuries held by the Civil Service fund with debt of the Federal Financing Bank, which would create about $4.8 billion in borrowing authority. Treasury has given short shrift in various statements about using the Federal Financing Bank, saying it wouldn't create a significant amount of borrowing authority. But if you're trying to scrape together $15.5 billion to make an interest payment, $4.8 billion gets you 30% of the way there.


Finally, if Congress hasn't increased the debt limit by August 2, Treasury Secretary Geithner would be on solid ground in extending the length of the Debt Issuance Suspension Period (DISP), which would allow Treasury to make further use of the CSRDF. Declaring that he expected the DISP to last another month, for instance, would provide Treasury immediately with another $6.0 billion in borrowing authority.

In sum, Treasury is going to start August with less cash than we thought previously. We still think Treasury could probably pay its obligations through August 15, but it's become a much closer call.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Robert Neville's picture






it's fuunny that the governemt selctivly follows laws, They ignore the constitutiion but adhear to the debt limit.

Dr. Engali's picture

Laws,like taxes, are for the little people. And no I don't mean midgets.



I can barely read what I am typing. Wish I could change the font size.

Jeff Lebowski's picture

Understand your pain, but try holding the control button and pressing the "+" key to make it more legible.

duncecap rack's picture

How will the fed keep yeilds down when the enormous ammount of new issuance hits the market later in August?

jkruffin's picture

Subtract, $30,000 from that total as I just put in my redemption for all my cash to come back to my bank.  I don't trust Geithner one bit....

TaxSlave's picture

Treasury can stop paying for ongoing programs and pay the interest out of income.


trav7777's picture

bbbut...that means our soldiers will be left without the tools they need to defend us from the terrists who hate all of our freedoms

Sudden Debt's picture

Are there no more pension funds to rob?

Why not confiscate checking accounts that haven't been touched for 6 month by private people? If they don't touch it, they don't need it right?

Why not stop with paying government wages?

Why not SELL US property on the Cheap to JPM?

Why not print money and don't tell anybody?

Use the Army to go door to door and ask 1000$ from every citizens? Those who can't pay can work it off in the saltmines.



I just came up with all those sollutions IN 2 MINUTES!!


That's it... he's fired... he can clean up his desk.


DOT's picture

When it defaults the government will have fired itself.  ====>  Table stakes Bitchez !

wombats's picture

WOW!  This means the drama can continue for another 2 weeks as kick the can down the road a little farther.  Then Obama declares an emergency and martial law and does whatever the hell he wants anyhow.

lexic0n's picture

@ Robert - I think it is more global markets forcing the US to adhere to the debt ceiling. The US gov't would love to ignore it at this point, but the ratings agencies (and all US debt holders) are watching, so they cannot.

Just my $0.02.

RiverRoad's picture

It's called "dough" 'cause you can throw it up in the air and stretch it oooooooout.

Manthong's picture

Can you imagine going back 25 years to Paul Volker and James Baker and positing: "The Treasury is going to open one month with $55 Billion in cash, over two weeks add $375 Billion in deposits and then find itself $16 Billion in the red.. What do you do?"

Miss Expectations's picture

Here's what my cash flow looked like in 1981*

            Opening Cash        Deposits       Withdrawals     Closing Cash

8/1       85.00                     180.00          25.00              240.00

8/8      240.00                    180.00         25.00              395.00

8/15    395.00                    180.00         40.00               535.00

8/22    535.00                    180.00        110.00              605.00

8/29    605.00                    180.00         560.00             225.00

* Not thousands, millions, billions or trillions.

August was GREAT, it had an extra week.   I saved $1.20/day by walking instead of taking the bus.  I found every happy hour bar that had buffet food (dinner), buying only one qualifying beer.  Learned to avoid South Street after work because those bond traders weren't only drunk, they were crazy.  A zero debt limit start served me well and set in motion a debt-free life, which affords me more freedom than most people I know.



ThirdCoastSurfer's picture

560 in fixed cost expenses!  I hope you're still in that apartment and that it's now rent control!  

trav7777's picture

These amounts are absolutely staggering

karmete's picture

Great!!! thanks for sharing this information to us! sesli siteler sesli sohbet

chinawholesaler's picture

Eye Mask Wholesale Coaster
Digital Photo Frame

Photo Frame
Wholesale Knife Wholesale Bracelet
Wholesale Banner

Wholesale Flashlight
Stuffed Animals Audio Video Equipment
Wholesale Compressed Products

Wholesale Kitchenware
Wholesale Coaster Wholesale Magnifier
Wholesale Camera

Wholesale Mirror
Wholesale lable Reflective Safety Vest
Patient Care Products

Inflatable Products
Personal Safety Products Wholesale Playing Card
Promotional Gifts

Wholesale Glove
Wholesale Keyboard Business Gift
World Cup Products

Wholesale Tag
Wholesale Racks Wholesale Memory Card
Poncho Raincoat

Reflective Safety Vest
Money Clip Wholesale Cards
Wholesale Scale

Wholesale Belt
Wholesale First Aid Kit Wholesale Scarf
Wholesale Lanyard

Wholesale Glass
Wholesale Cup Wholesale First Aid Kit
Safety Suppliers

Bottle Opener
Wholesale Keychain Wholesale Compressed Products
Audio Video Equipment

Wholesale Mug
Digital Photo Frame Wholesale Bag
Giveaway Material

Solar Products
Wholesale Tellurion Mouse Pad
Wholesale Scissors

Wholesale Thermometer
Solar Products Lady Beauty Care
Mouse Pad

Wholesale Mat