Wall Street Is Getting Debt-Ceiling Clarity Before Its Return on Dec. 31
- Re-issued government memo removes ‘some ambiguity’ around TGA
- Treasury will have to shrink cash pile before Jan. 1, 2025
The US Treasury building in Washington, DC.
Photographer: Samuel Corum/BloombergWall Street strategists looking ahead to Dec. 31 — when the current suspension of the US debt ceiling ends — gained some clarity from the Justice Department, leading market participants to expect a smaller reduction in Treasury bill supply.
The Treasury has to shrink its pile of cash as it approaches the suspension deadline, as mandated by legislation. Until 2021, this had meant reducing the balance, known as the Treasury General Account or TGA, to the lowest point that was hit during the previous confrontation. Those occasions resulted in a significant reduction of Treasury bill supply before the US came close to exhausting its borrowing capacity.