(Bloomberg) -- The US Treasury Department is considering postponing its regular three- and six-month bill auctions “tentatively” scheduled for next Monday if constraints around the statutory debt limit remain.
Ordinarily, the department would have announced on Thursday the size of the upcoming week’s three- and six-month benchmark bill sales and they would be sold the following Monday. Instead, it announced Thursday that it is only “tentatively” planning to hold next week’s three- and six-month bill sales next Monday.
Next Monday is the date that Treasury Secretary Janet Yellen has warned the government may run out of cash if a legislative fix on the debt ceiling isn’t implemented.
Treasury said that it was “tentatively” announcing its intention to auction $65 billion of 13-week bills and $58 billion of 26-week bills on Monday but that “these announcements are conditional on enactment of the debt limit suspension because Treasury forecasts insufficient headroom under the current debt limit to issue securities in these amounts” on the day they are set to be issued.
The Treasury said it may postpone these auctions if Congress has not passed pending legislation in time and that it will provide further updates regarding the announcement of these auctions by 10 a.m. ET on Monday.
The announcement comes amid clear signs that the Treasury’s cash and borrowing situation is getting more straitened.
The amount of cash in its coffers shrank to just $37.4 billion on May 30, the least since 2017. And the department has also been gradually exhausting the various accounting gimmicks it uses to stay under the $31.4 trillion debt cap. It announced this week the availability of $1.9 billion in so-called extraordinary measures from a complex debt-swap maneuver with the Federal Financing Bank, but even with that the situation appears to be tight.
The three- and six-month sales, if they proceed, will however be bigger than the most recent ones at those tenors as the Treasury seeks to ramp up its cash balance again — presuming a debt-ceiling fix is implemented by then.
On Capitol Hill, meanwhile, the House of Representatives passed debt-limit legislation forged by President Joe Biden and Speaker Kevin McCarthy that would impose restraints on government spending through the 2024 election and suspend the ceiling until 2025. The deal will now be deliberated upon by the Senate, where approval is virtually certain and the only question is timing. Senate Republican leader Mitch McConnell said earlier Wednesday that the measure could get a vote as soon as Thursday, days ahead of the June 5 default deadline.
(Updates with Treasury comments, additional detail from announcement, context. A previous version of this story was corrected to say that Treasury may postpone and that auction is tentatively scheduled for Monday.)
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