US Treasury Cash Pile at Lowest Level Since 2017 Amid Prolonged Debt Talks

As negotiators in Washington grapple with the challenge of reaching a consensus on the statutory debt limit, the US Treasury’s cash balance is rapidly dwindling. The treasury balance has now reached 38.8 billion US dollars on Thursday 25 May- lowest recorded since the year 2017.

This figure represents a decline from $49.5 billion the day before. It even has a significant drop from $140 billion reported on May 12. The decreasing cash balance is a result of measures implemented to avoid breaching the $31.4 trillion debt cap. This amount has diminished from around $92 billion recorded on May 17, leaving limited resources to sustain government operations.

Secretary Yellen has even said that the Government might face shortage of funds in June. Deutsche Bank strategist Steven Zeng remarked, “In looking at the extraordinary measures and settlements coming in the next few days, it seems like they’re using up all of it by June 1.” This suggests that the available measures will likely be exhausted soon, heightening the urgency to resolve the debt limit issue.

Meanwhile, the premium demanded by investors for holding US Treasury securities that carry a higher risk of default if an agreement is not reached has continued to decline. Yields on such securities fell below 6% on Friday, signaling a diminishing level of market concern.

The ongoing negotiations and the precarious state of the Treasury’s cash balance underscore the need for swift action to address the debt limit and ensure the continued functioning of the government’s financial obligations.

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