The debt ceiling issue is hanging over the market. Geithner commented today that the government would raid Federal pension funds to avoid breaching the debt ceiling for the next few weeks. Does that mean that there will be no new Treasury supply? And the question that follows that—where will the $87 billion in Fed MBS and Treasury purchase settlements wind up. The dealers may sit on most of it, waiting for the return of normal levels of Treasury supply, but some it is likely to find its way into mischief.
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