The grace period between February and mid-May, when the US spent like a drunken sailor without regard for even structural limitations, and raked up over $300 billion in debt, or said otherwise when it was without an official debt limit, is over as of this weekend as we reported [3], and starting Monday the clock has been reset and wound up to the amount of the debt previously incurred in the phantom period. Courtesy of today's Daily Treasury Statement [4]we now know that the new and improved debt target ceiling, at which the US immediately finds itself is: $16,699,421,095,673.60.
[5]
As a reminder, since the US is automatically at the debt ceiling where it was four months ago but magically got a a $300 billion reprieve despite all the talk of austerity because no bipartisan agreement could be reached, the total amount of US debt will not change until Labor day, at which point all the various Treasury gimmicks to incur less debt expire and either the US is forced to start prioritizing debt, or it defaults outright.
And as we pointed out, early September is when the fun really starts: it will be just after the Jackson Hole conference where Bernanke will be absent for the first time, and just before the September FOMC meeting at which Bernanke will most likely announce some, if not substantial, tapering of QE, and when the Tepper theory that QE is good but less QE is gooder.
So enjoy the no-volume, hypnotic levitation until then, but load up on Sept VIX calls: that's when the fun starts all over again.