Debt-Limit Deal Reduces Odds of Significant Bill Cheapening: CS
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
People
Praveen Korapaty (Credit Suisse Group AG)
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UUID: 7947283
(Bloomberg) -- Given the short debt-limit suspension, unlikely to see the “significant cheapening” of Treasury bills and 2Y notes vs OIS that was previously expected, Credit Suisse strategists led by Praveen Korapaty say in note.
- Under a three-month suspension, Treasury not expected to raise its cash balances “much beyond” $100b-$150b by Dec. 9; bill issuance likely to be $70b-$120b in 4Q, “significantly lower” than the ~$400b assumed for a much longer suspension period
- “Interesting consequence” of shift in debt-limit dates is that excess reserve balances at the Fed may see “far less severe” decline over next six months than originally projected; as a result, “much of the tightness priced into funding markets needs to be unwound”
- Short-term debt-limit suspension and continuing resolution “likely to muddy the legislative calendar over the next few months” and complicate tax reform efforts, as any of these issues “will likely become entangled with the budget process in December”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
People
Praveen Korapaty (Credit Suisse Group AG)
To de-activate this alert, click here
To modify this alert, click here
UUID: 7947283