Treasury Will Issue $170 Billion in T-Bills Right Around the X-Date

• The Treasury Department plans to issue $170 billion in T-bills right around the X-date.
• The auctions will settle on June 1, which could be when the government runs out of money.
• Meanwhile, the government’s cash balance has dipped below $50 billion.

The Treasury Department plans to issue about $170 billion in bills around when the government is expected to run out of cash unless lawmakers raise the debt ceiling.

On Tuesday, the Treasury will auction $119 billion worth of three-month and six-month bills, with sales resolving two days later on June 1. It will also issue a $50 billion six-month bill for cash management that will settle on June 1 as well.

Fears of a default have eased as lawmakers indicated they are close to a deal to lift the debt ceiling. But key conservatives remain wary, and with the deadline just days away there is little margin for error.

Treasury Secretary Janet Yellen reiterated this week that the government will run out of money as soon as June 1.

But the planned auction next week of $170 billion in T-bills could suggest that the Treasury still has some wiggle room left under its “extraordinary measures” and that June 1 may not be a hard deadline.

Meanwhile, the government’s cash balance continues to shrink. As of Wednesday, the Treasury’s General Account had at $49.5 billion, down from $60.7 billion last Friday and $140 billion two weeks ago.

The Treasury General Account is used to pay for debt service on government bonds — preventing the US from defaulting — among the myriad other outlays like entitlements and federal employee salaries.

That cash will come under pressure next week as June 1 is also the date of maturity for $117 billion in T-bills, according to Reuters.

The Treasury account ebbs and flows daily as tax revenue comes in and payments go out, making it difficult to predict exactly when the government will run out of money. Analysts at Goldman Sachs had previously forecast that the X-date could fall between June 8 and 9.

If the Treasury’s cash runs out before a settled agreement, the US would enter a default, fueling an unprecedented economic crisis that could initiate a global recession. The odds of the government going past the X-date without a debt ceiling deal are 25% and rising, JPMorgan estimated.