Debt Ceiling Crisis Threatens Stock Market Liquidity and Deal Making.

A debt ceiling agreement is likely to come soon, which means the Treasury will be able to refill the Treasury General Account, leading to a decrease in reserves and reduced liquidity levels in the markets. The size of the Fed's balance sheet has been shrinking again, which has been neutralizing some of the effects of the declining TGA account. The debt ceiling resolution would lead to a refill of the TGA, which has kept the author leaning bearish and a non-believer in the rally thus far this year.