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Treasury’s Auction Postponement: “Canary in the Coal Mine”

Thursday, October 22, 2015

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Washington, D.C. – The following statement is from Shai Akabas, associate director of economic policy at the Bipartisan Policy Center (BPC), on Treasury’s auction postponement.

“Today, Treasury announced that it would postpone next week’s auction of 2-year Treasury notes that were scheduled to settle on November 2. This would have been just one day prior to their latest debt limit estimate of when the federal government would exhaust its borrowing authority, absent action by policymakers. This auction suspension could be the proverbial canary in the coal mine. We have regularly emphasized that the risks grow with inaction.

“Treasury’s projection of Nov. 3 for the exhaustion of its borrowing authority remains roughly consistent with BPC’s Nov. 10-19 ‘X-date’ range, which is an estimate of when Treasury would run out of its cash on hand and default on some of its obligations. In order to definitively prevent such an outcome, policymakers would need to act well in advance of that time period.”