Wall Street, Not Waiting on Mnuchin, Readies Debt-Limit War Room (Sifma revisiting, revising 2011, 2013 contingency plans)

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(Bloomberg) The key industry groups that seek to prevent seismic disruptions in the world’s biggest debt market aren’t waiting around to see if Treasury Secretary Steven Mnuchin can get Congress to lift the debt limit before America exhausts its borrowing capacity.

The Securities Industry and Financial Markets Association, the $14.1 trillion Treasury market’s self-regulatory body, is revisiting and revising work done ahead of previous debt-ceiling showdowns in a bid to lessen the potential market disruption should politicians fail to raise the debt ceiling in time. The group’s primary focus is how operational issues such as trading, clearing, and settlement would be affected should debt payments get delayed. Sifma’s preparations coincide with similar efforts being undertaken by the Federal Reserve-sponsored Treasury Market Practices Group.

Call this “A View to a Shill.” Or the war room for the US invasion of Grenada.

5 year Credit Default Swaps on the US are rising, but not by much.

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Although we are seeing some reaction in the swaps market, but only back to May 2017 levels.

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Market participants and credit arbiters say a plan that was secretly considered by the Obama administration when the country almost breached the debt limit in 2011 signals that debt prioritization is a likely option if needed in 2017.

Good luck with that debt ceiling fight-off when mandatory Federal spending is going into warp-drive.

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With Medicare leading the way.

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