RE:RE:RE:RE:Will the reverse repo market replenish the TGA account? 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 half the people in the US are living paycheck to paycheck.
The question then becomes who is going to buy all that debt? Right now, and re-iterated today by J Powell, the Fed is in the process of reducing its balance sheet so until that policy changes, the Fed will not be a buyer of this debt as they were before.
The next question will be - at what maturities will this debt be financed? With a steeply inverted yield curve this could become very interesting as to how this will be financed.
The other thing is that the US Government isn't the only kid on the block issuing debt - there is also corporate debt and consumer debt (currently sitting at a record high for credit card debt) competing for the same lenders. While I don't think right now that we will see the competition heat up to the extent that it was in 1981, that possibility cannot be removed from the table.
This issue is compounded by the fact that other countries (even China) are running deficits that need to be financed. So for the US, one of its "favourite" buyers of Treasuries has actually been a seller and their holdings of US debt now sits at the lowest it has been in 12 years.
Don't know about the rest of you, but none of this gives me a warm fuzzy feeling.