Financial Issues: Why A debt-Ceiling Stalemate Could Push Reverse Repo Demand to $1.4 Trillion in the next 3 Months?
Source: marketwatch.com Joy Wiltermuth 6-7 minutes Record demand for the Federal Reserve’s overnight reverse repo program could touch a new milestone of $1.4 trillion by year-end, according to Barclays rates strategist Joseph Abate. That’s mainly because he sees demand for the facility climbing if debt-ceiling negotiations in Washington drag out through the fall, which could cause the already dwindling supply of Treasury bills to shrink even further. Treasury Secretary Janet Yellen on Wednesday again urged Congress to suspend or raise the debt limit , saying it’s most likely that “cash and extraordinary measures will be exhausted during the month of October.” The debt-ceiling talks are part of a long to-do list for U.S. lawmakers to tackle in the coming weeks, which could rattle markets, writes MarketWatch’s Victor Reklaitis. Because the Fed’s reverse repo facility still has more capacity to expand, some on Wal