Within our latest CIO Special, 'T-Bill Torrent: what next after the U.S. debt ceiling deal?' we look to outline the next steps for investors as the U.S. Treasury looks to replenish its Treasury General Account (TGA) with a surge in supply.

We assess the impact on both rates and credit markets, equities as well as overall liquidity for markets attempting to find a home for over USD 1.1 trillion in freshly printed Treasury bills.    

 

We highlight the following:

  • The U.S. Treasury is expected to issue around USD 1.1 trillion of T-bills by the end of the year to replenish its empty TGA coffers.
  • Combined with the Fed's ongoing quantitative tightening, this could reduce liquidity at an annual rate of 6% leading to further outflows of bank deposits.
  • Going forward, shrinking bank deposits could create near-term headwinds for riskier assets – especially equities and high-yield bonds.

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