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Here’s What Happens When The Treasury Sheet Hits The Fan

Even though a stopgap budget deal was passed this week that will expire on December 11, the  countdown is still on for the Treasury to run out of cash as it bumps against the debt ceiling and has no more accounting tricks in its bag to avoid spending its cash. This week it cut the size of the 4 week bill again as a result, to just $10 billion, down from $40 billion a week just a few weeks ago, and it allowed a 3 week Cash Management Bill totaling $25 billion to expire. As a result, the Treasury paid down a whopping $62 billion in outstanding T-bills on Thursday. That’s a record amount of cash to stuff into dealer and other institutional accounts.

We knew that these paydowns were coming and that they would be the source of short squeezes in Treasuries and stocks. The markets have not disappointed.

This report shows what the real time Federal tax collection and cash position data trends mean for the markets and major economic data releases, in the weeks and months ahead.

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