Suncor Energy Inc. T.SU

Will the reverse repo market replenish the TGA account?

[Torontojay]

The US government needs about $600b to fill their TGA accounts and another $300-400b to pay back loans borrowed from government employee pension accounts among other things. In total, they will need about $1 trillion to satisfy their deficit appetite over the next month or so. It is my best guess that some of this money will come from the reverse repurchase facility (rrp), but I believe a significant amount will come from bank reserves. Why does this even matter? 

Well, if the Government borrows $1 trillion and it all comes from the rrp facility, then liquidity for the real economy can remain intact. On the other hand, if the rrp facility makes up a small % of this TGA account, then there will be a significant liquidity drain in the months ahead from households making up the difference in t-bill purchases.  Less bank reserves means less loans can be issued and this puts a big dent on the US recovery. I only use the word recovery because the stock market is behaving as if we're going to have a "no landing" ahead.  People were too consumed with the debt ceiling resolution when the biggest issue today is the impact the TGA refill will have on liquidity in the markets. 

Something to ponder about...

[marketsense]

The TGA refill is not going to be an easy one.  They are essentialy borrowing from "Peter" to pay "Paul".   The rest of the world sees what a debt addicted mess they are in and if wasn't for the US$ reserve status,  the US$ would get hammered. Many issues here.  The Fed is trying to reduce inflation by rising rates and the Treasury needs to float at

[Experienced]

This is only the beginning... 1...they will still have to float further borrowing to get through the rest of this fiscal year and the projected budgetary deficit is 1.5 trillion 2...the US Government will be floating trillion plus debt financing for the next 10 years.  I encourage everyone here who is interested in this to review the CBO scoring of the debt deal.  The annual budgetary

[555rookie555]

I heard Powell say that bank reserves are quite full now and he doesn't expect lending resources to become scarce. ... I think there is going to be pain on the rental side though - Powell was talking about the need for rent to remain low but how does that happen when interest rates are much higher than expected? Maybe large rental corporations were strategic enough to resign mortgages during

[555rookie555]

My gut suggests you're right. I'm sitting on 50% cash, deliberating moving to 100%

[Torontojay]

T-bill rates have to move much higher to attract interest. It would be prudent to move over to t-bills and cash during this time and less in equities. There is too much froth in the markets and I certainly see storm clouds ahead. Worst case scenario is I'll earn 5% on my money risk free with some price appreciation potential but I underperform the stock market. Best case scenario is that I

[Experienced]

Just to put a few things into perspective... According to the CBO latest forecast which is AFTER the debt ceiling deal, The US Government over the next 9 years will need to borrow a bit less than the whole country'scurrent annual  GDP.  This projection assumes that there is no recession in any year between now and 2033.  That is a heavy lift IMO and especially since more than

[555rookie555]

This seems like a good scenario and I like it better than sitting only on cash. My first time looking into fixed income  Do you have any T bill or other bond symbols that provide decent buy/sell flexibility?

[autofocus111]

US TBill ETFs >>> SGOV and BIL