US Treasury Bill Supply Surge Sparks Market Concerns

The US Treasury is expected to issue a wave of government bonds after the recent suspension of the debt limit, with estimates of $1.3tn in net bill issuance by the end of the year. This could potentially drain liquidity in financial markets, but the impact could be softened if money market funds move allocations away from the overnight reverse repo facility and into Treasury bills. However, expectations of further interest rate hikes by the Federal Reserve could dampen demand for T-bills.