Jefferies, the investment bank, warned on Tuesday that the short-term extension of the US government's borrowing authority may not last beyond the end of December and that the Treasury may not be able to repay its debt this year.
Jeffery economists Thomas Simmons (Thomas Simons) and Anita Makoska (Aneta Markowska) wrote in a note to clients: "We do not have enough information to set a specific date, but we suspect that the debt ceiling extension will fall between December 24 and December 31. Given our forecasts, the chances of the Treasury making it through the end of the year are very slim. "
The U.S. Treasury has worked out how to use most of the $480 billion capital increase approved by Congress, the largest of which goes to the so-called "special measures" that Treasury Secretary Yellen has been using. Replenishing these treasury funds that have been used through special measures will deplete more than half of the planned quota increase.
However, once the borrowing authority is cancelled, the US Treasury will once again turn to special measures. Only less money will be available this time because officials will not be able to get the one-time payment they received on September 30th. Jeffery economists expect the borrowing authority to expire around mid-December, with special measures raising nearly $300 billion.
"there is a lot of uncertainty in the forecast, but we expect the final date to be sometime between Christmas and New year," they said. "
Treasury Secretary Yellen said in a letter to Congress on Monday that the Treasury would be able to fund federal operations by December 3 and that Congress must act to suspend or raise the debt ceiling, which would provide longer-term certainty.