We got a demonstration on Friday of what happens when $62 billion in Treasury paydowns hit the market all at once. That was the total cash which the Treasury stuffed back into the accounts of the holders of expiring paper, which they could not roll over because the US Government is up against the debt ceiling. It can’t borrow more and it has exhausted the bag of accounting tricks it has used to avoid going over the ceiling for months.
Over the past few weeks we have seen the Treasury repeatedly dip into the massive cash hoard it built up this year in order to pay down short term debt. This week was the biggest of those paydowns yet, and perhaps ever.
Here’s the schedule for the next few weeks, along with what to expect from the markets as a result.
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