Treasury retains auction sizes, says extraordinary measures around debt limit will be exhausted in next 6 months

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Reuters


Treasury Secretary Steven Mnuchin and White House officials are reportedly pressing Congress to act soon on a debt ceiling increase.

The numbers: The Treasury Department will auction $84 billion in notes and debt next week in its quarterly refunding auctions, retaining the size of its prior offerings, the government said Wednesday.

The department also said its extraordinary measures to keep the U.S. below the debt ceiling “will be exhausted sometime in the second half of the year.”

What happened: The department will auction $38 billion in 3-year notes












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on May 7 and $27 billion in 10-year notes












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on May 8. The government will also sell $19 billion in 30-year bonds












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on May 9.

The offerings will refund about $55.4 billion of Treasury notes and other government paper and will raise $28.6 billion in cash.

The balance of Treasury financing requirements will be met with weekly bill auctions, cash management bills, the monthly note auctions, the sale of Treasury inflation-protected securities, popularly known as TIPS, and regular 2-year floating-rate notes.

Big picture: The government is expected to run a deficit of around $1 trillion for this fiscal year. Economists said pressure on Treasury to increase auction sizes was due in part to the Federal Reserve’s decision to end, earlier than expected, its $3.9 trillion asset portfolio, in a process known as quantitative tightening.

In February 2018, Congress suspended the debt ceiling. That suspension ended on March 1. Since then, the department has been using extraordinary measures to stay below the debt limit. There is concern that Congress won’t be able to pass a debt-limit measure as lawmakers have focused on a disaster-relief-measure. The Washington Post, however, reported that the Trump administration is working behind the scenes (paywall) for a quick resolution to the debt-ceiling impasse.

The government will also need to be funded after the start of the new fiscal year on Oct. 1. There are worries about the potential for another government shutdown as President Donald Trump and House Democrats duel about competing priorities.

In addition, a fiscal cliff is looming at the end of the year if no agreement on spending levels is reached.

Market reaction: Stocks were set to open higher as quarterly results from Apple Inc. cheer investors. On Tuesday, the Dow Jones Industrial Average












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gained around 2% to 26,592.



Source : MTV