Treasury will spend $170 billion in T-Bills around X date

Treasury Secretary Janet Yellen.
Drew Angerer/Getty Images

  • The Treasury Department plans to issue $170 billion in T-bills by date X.
  • The auctions will be settled on June 1, which could be when the government runs out of money.
  • Meanwhile, the government’s cash balance has fallen below $50 billion.

The Treasury Department plans to issue about $170 billion in bills by the time the government is expected to run out of money unless lawmakers raise the debt ceiling.

On Tuesday, the Treasury will auction $119 billion in three-month and six-month bills, and the sale will close two days later, on June 1. It will also issue a $50 billion six-month bill for cash management that will be paid on June 1. also.

Bankruptcy fears have eased as lawmakers have indicated they are close to a deal to lift the debt ceiling. But key conservatives remain wary, and with the deadline just days away, there’s little room for error.

Treasury Secretary Janet Yellen reiterated this week that the government will run out of money from June 1.

But next week’s scheduled auction of $170 billion in T-bills could suggest that the Treasury still has some wiggle room under its “extraordinary measures” and that June 1 may not be a firm deadline.

Meanwhile, the government’s cash balance continues to shrink. On Wednesday, the Treasury’s general account stood at $49.5 billion, up from $60.7 billion last Friday and $140 billion two weeks ago.

The Treasury’s General Account is used to pay debt service on government bonds – to prevent the US from defaulting – in addition to countless other expenses such as federal employee entitlements and salaries.

That money will come under pressure next week, as June 1 is also the due date for $117 billion in T-bills, according to Reuters.

The Treasury bill ebbs and flows daily as tax revenues come in and payments go out, making it difficult to predict exactly when the government will run out of money. Goldman Sachs analysts had previously predicted that the X date could fall between June 8 and 9.

If the Treasury’s money runs out before a final deal is reached, the US would default, leading to an unprecedented economic crisis that could trigger a global recession. The probability that the government will pass X-date without a debt ceiling agreement is 25% and increasing, JPMorgan estimated.

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