Posted on 05/29/2023 10:14:04 PM PDT by lasereye
Good news of a tentative deal for the U.S. debt ceiling impasse may quickly turn out to be bad news for financial markets.
While an end to uncertainty would be welcome, the relief that may come from a deal may be a short-lived sugar high for investors. That's because once a deal is reached, the U.S. Treasury is expected to quickly refill its empty coffers with bond issuance, sucking out hundreds of billions of dollars of cash from the market.
The raising of ceiling is expected to be followed by the issuance of nearly $1.1 trillion in new Treasury bills (T-bills) over the next seven months, according to recent JPMorgan estimates, a relatively large amount for that short a period.
This bond issuance, presumably at the current high interest rates, is seen depleting banks' reserves, as deposits held by private companies and others move to higher paying and relatively more secure government debt.
"There is certainly going to be a relief in the fixed income markets," said Thierry Wizman, global FX and interest rates strategist at Macquarie.
"But what this doesn't solve, is that along the whole Treasury curve yields have gone up recently... in anticipation that there will be a lot of issuance of treasury bonds and notes and bills in the next few weeks because the U.S. Treasury has to replenish its cash."
"Our concern is that if liquidity starts leaving the system, for whatever reason, this creates an environment where markets are crash prone," said Alex Lennard, investment director at global asset manager Ruffer.
Mike Wilson, equity strategist at Morgan Stanley, agreed. Treasury bills issuance "will effectively suck a bunch of liquidity out of the marketplace, and may serve as the catalyst for the correction we have been forecasting," he said.
(Excerpt) Read more at reuters.com ...
And yet all we've been hearing from the media is what a catastrophe it would be if they didn't extend the ceiling. It's like the Emperor's New Clothes.
Idiots. Shiv McCarthy goes and folds to Brandon when he has all the cards.
What is important is that the thieving government employees get paid for their efforts and their politician managers get the ability to buy votes.
Well, if you don’t like the current set of lies they’ll provide others.
How does McCarthy hold all the cards when, Biden has the WH and Senate. The media would pin any default on the GOP, like they’ve done each and every time.
The House already passed a bill, we had leverage, and he pissed it away.
The AMD stock I own has gone UP $46 since May 2.... : )
Current price is $127.03
https://finance.yahoo.com/quote/AMD?p=AMD
I retired when it was at around $158 in mid nov 2021 and 6 weeks later it dropped to about $102... then by Oct 2022 it was around $54 !
The wild prices were due to congress spending $6.2 trillion causing massive inflation and price hikes. The stock market went south and is now going up as the interest rate hikes are about to stop and the election year is coming.
I guess you didn’t notice that it was DOA and never mentioned in the Senate. Biden didn’t even have to worry about a veto.
It was at negotiating Phase, we were winning, and at the key point, he folded.
No. Know your history. Each time we have a shutdown or default, the media blames it on the GOP. He had zero leverage.
At least the Budge is frozen with discretionary spending. It’s the best deal we were going to get. If you want a conservative Budge, you have to win Elections.
Yeah, ok. Climate boondoggle spending stays, Irs agents stay, Globalist spending stays. BETRAYL.
Win Elections.
We did
Yes...more Sydney grand delusions. Everybody is a winner.
Hard to do when ballots are fixed.
And when when do win, we get this.
.
I just went back and watched and read what the Republicans were promising if they won the House:
A Secure Border
Eliminating the 87,000 IRS Agents
Stopping the Justice Double Standard for Republicans by the Deep State
—-
They Clearly Lied.
.
Kicking the can down the road to 2025 January, 4 trillion still given up to the rats in control, nice job
We never had leverage.
Deep State controls Congress.
Now explain oil stocks over the past two years. Did they go up because of congressional spending?
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