Long After Deal, Debt Limit Disruption Lives on in Repo Market
- Treasury keeps bill sales small during debt-ceiling suspension
- Lack of supply means repo rates stay low in face of Q3 end
Lew Says Debt Ceiling Being Used as Political 'Extortion'
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Congress may have suspended the debt ceiling through Dec. 8, but the short-term reprieve is still distorting funding markets, particularly that for repurchase agreements.
Since the Treasury has less than three months until the limit is reinstated, it hasn’t ramped up its bill supply as much, or as quickly, as after past postponements. Three- and six-month bill auctions have increased by just $3 billion, four-week by $15 billion (less than most in the market expected), and the Treasury has yet to issue more cash management bills.