Halister News

(Bloomberg) -- Risks remain that the Fed could postpone planned policy actions in September as potentially contentious debates around a government shutdown and debt ceiling will both occur during the same month, TD Securities strategists Michael Hanson and Priya Misra say in note. 

• May be a “noisy and divisive” process to raise the debt ceiling, which in the past has “led the Fed to become more cautious in its language and actions,” especially if markets appear concerned
• Debt limit contributed to the Fed’s decision to not hike in Sept. 2015 and delayed the Fed’s taper in 2013
• There’s a technical issue since Treasury has to issue debt to let the Fed run off its portfolio, “and a lack of resolution of the debt ceiling can jeopardize that plan”
• Debt ceiling concerns have already seeped into the bill market; yields on Treasury bills maturing Oct. 19 have risen by about 9 bps since Wednesday, exceeding those on bills maturing later in the year
• SEE EARLIER: Game of Twister Awaits T-Bills as Debt-Ceiling Anxiety Deepens

To contact the reporter on this story: Alexandra Harris in New York at aharris48@bloomberg.net To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net Brian Chappatta