The U.S. Debt-Limit Increase Is Mostly Earmarked for Use Already
- Extraordinary measures already used need to be accounted for
- Jostling means less near-term bill supply for investors
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The U.S. Treasury has already mapped out how to use up most of the half-a-trillion-dollar debt-ceiling increase that Congress has passed, so any let-up in money-market pressures is likely to be brief.
While the $480 billion of extra capacity at first glance seems like a big number, it will almost immediately shrink after Joe Biden signs it into law. That means investors who park their funds in short-term instruments are unlikely to get the kind of boost to Treasury bill supply that they’ve been craving for most of this year, keeping rates in associated markets tethered close to zero.