Thread by @LynAldenContact

The TGA chart is so wild to look at.

It's currently down to around $80 billion until they get a debt ceiling resolution. The target level they wanted it at by now is $750B.

https://twitter.com/LynAldenContact/status/1370507351648768005

Once the debt ceiling is resolved (December?), the Treasury targets a $750-$800 billion cash balance (will they revise that?), meaning they have to issue a lot more bonds than they're spending for, at a time when the Fed is maybe reducing their rate of asset purchases.

I'm looking back through my Feb 2021 thread, with the update being that it's all pushed back half a year due to the debt ceiling (Treasury had to draw TGA down ~$800B more than they wanted).

So, instead of being a 2H 2021 thing, it's a 1H 2022 thing.

https://twitter.com/LynAldenContact/status/1361529545250267137

The Treasury's current issuance plan is to try to increase the average duration of the public debt.
home.treasury.gov/news/press-rel…

However, instead they'll likely have to issue more T-bills instead when the debt limit is resolved, reducing the average duration of public debt and alleviating some of that collateral shortage.

By reducing the duration of Treasury issuance, the TGA might be able to fill back up even as the Fed reduces asset purchases (and RRP usage comes down).

But that makes the national interest expense more sensitive to the Fed's effective fund rate, if they ever try to raise that.