The first two days at the debt ceiling in pictures
I wrote a post this weekend that explained how the extraordinary measures work and what was likely to happen this week. This post shares what actually did happen with the extraordinary measures on Tuesday and Wednesday.
Tuesday the 21st
Treasury did in fact hit the debt ceiling on Tuesday.
which required the early redemption of ~10.852b govt account series Treasuries held by the Civil Service Retirement fund (extraordinary measure)
to provide enough head room to allow for a chunk of the net bill issuance on the day of ~19b
Wednesday the 22nd
I wrote the following over the weekend regarding what was likely to happen on Wednesday.
Turns out we remained at the debt limit on Wednesday because the large payment into the Supplemental Medical Insurance Trust fund indeed hit on Wednesday the 22nd
20.4 billion was redeemed from the Social Security Trust fund (old age and survivors insurance) which created 20.4 billion debt room, but ~10b of that was needed to accommodate the payment into the Supplementary Medical Insurance Trust fund. Other trust fund net payments/redemptions factor in as well but their impact is usually small but you can see the +1.8b into the Hospital Insurance Fund and -300m from the Disability Insurance Trust Fund in the image. When all those trust funds were taken into account on Wednesday the Treasury had about ~9.761b in debt room left, so they used it by putting that amount back into the Civil Service Retirement Fund. (so ~1b away from coming back under the ceiling for one last day)
So Treasury went from redeeming 10.8b in Treasuries from the Civil Service Retirement Fund on Tuesday (swapping in an effective IOU to make the fund whole) to reissuing 9.761b of that 10.8b on Wednesday because they got the room back due to the other trust fund activity and basically no publicly held debt activity.
Got the room back for a day.
Thursday the 23rd
Huge net bill issuance on Thursday will force Treasury to use much more bonus borrowing room afforded by the extraordinary measures. Expect the Civil Service Retirement Fund to get 15-16b redeemed from it and a sizeable chunk of the 299b available from the Thrift Savings Fund (likely > 50b) redeemed (without corresponding issuance) as well to create the headroom to meet Treasury’s net bill issuance
Follow along at home
Daily Treasury Statement is available here
https://fiscaldata.treasury.gov/datasets/daily-treasury-statement/operating-cash-balance
and the Govt Account Series debt/Trust Fund data is available here
https://fiscaldata.treasury.gov/datasets/daily-government-account-series/held-by-the-public-daily-activity
X-Date projection out this weekend.
Best,
John