In Short: Debt-ceiling can gets kicked down the road

09-07-2017

A deal struck between the White House and Congress appears to have taken a debt-ceiling showdown and possible government shutdown off the table for the next few months, eliminating a near-term threat that had caused October Treasury bill yields to spike. That said, the market pricing for bills now has December in a bit of a flux, as the stop-gap measure that would continue to fund the government is set to expire in the middle of that month. While details of how the temporary reprieve would fully work are not yet known, we would expect a seesaw of near-term Treasury issuance, with substantial supply in the weeks to come balanced against likely dramatic paydowns in December. The wild card, of course, is what happens then regarding the next act in this debt-ceiling drama. We’ll keep you posted.