06/01/2023
At present, the U.S. House of Representatives has passed the debt ceiling agreement reached by Biden and McCarthy, which is almost a certainty. However, many investors worry that after the agreement is passed, the U.S. Treasury Department will issue a large amount of bonds to rebuild cash reserves, which may put pressure on market liquidity.
I don't think it's anything to worry about. Restoring a healthy balance between the U.S. Treasury General Account (TGA) and the Fed will require the issuance of approximately $750 billion in U.S. Treasury securities over the next 3 to 4 months. It only affects the market if liquidity shifts the risk premium by changing fixed income prices or sentiment, but these are currently not playing a role. Therefore, the outlook for economic growth, inflation and monetary policy is actually more important than TGA. "
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