Treasury Cash Pile Hits Lowest Level Since 2017 as Debt Talks Drag On

The US Treasury’s cash and borrowing situation is getting very tight.

(Bloomberg) — The US Treasury’s cash and borrowing situation is getting very tight.

While negotiators in Washington struggle to try and hammer out a deal on the statutory debt limit that will be amenable to both sides of politics, the Treasury’s cash balance is dwindling rapidly and the amount of accounting gimmicks that it has up its sleeve to avoid breaching the debt cap is declining.

The Treasury’s cash balance fell to $38.8 billion as of Thursday, the lowest since 2017, according to data published Friday. That’s down from from $49.5 billion a day earlier and $140 billion on May 12. The Treasury’s bank account has been under downward pressure recently because of measures being taken to avoid breaching the $31.4 trillion debt cap.

Meanwhile, the so-called extraordinary measures that Treasury Secretary Janet Yellen is using to avoid the borrowing limit are being exhausted too. As of May 24, the US Treasury had just $67 billion of the special measures left, the department said in a statement Friday. That’s out of a total of $335 billion of authorized measures that were available and is down from around $92 billion on May 17. 

Treasury Secretary Janet Yellen has warned that the government could run short of funds as soon as early June. But there have been signs of progress toward a deal between Republicans and Democrats in Washington, although no agreement just yet.

“In looking at the extraordinary measures and settlements coming next few days, it seems like they’re using up all of it by June 1,” said Deutsche Bank strategist Steven Zeng.

The premium investors demand to hold US paper that’s most at risk of default if Congress and the White House fail to strike a deal continued to retreat Friday, with yields sliding below 6%. 


(Updates to add information on extraordinary measures)

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