Even so, OCBC (SGX:O39
) interest rates strategist Frances Cheung does not expect a material upward impact on bill yields as firstly, these issuances represent delayed supply, rather than being entirely extra. Next, the US Treasury may pace out issuances or lower cash target, and last but not least, some funds will be mobilised from the US Federal Reserve’s reverse repos.
On June 3, US President Joe Biden signed into law a debt ceiling Bill passed by Congress, two days before the Treasury Department estimated it would run out of money to pay debts. The new deal suspends the debt ceiling until January 2025.
However, the next concern is the potential flurry of Treasury issuance (more than US$1 trillion or $1.35 trillion in the coming three to six months), which may compete with banks for cash and push up the shortterm funding rates.
