[Debt ceiling discussion mega-thread]

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Kevin M
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Re: [Debt ceiling discussion mega-thread]

Post by Kevin M »

Stocks are flat to down a bit so far today. Bond ETFs are all up, with the longer terms up more (so yields are down).

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I've been rooting for higher bond yields, especially TIPS, since I will be receiving some cash soon from a maturing IRA CD that I want to put into TIPS, so not happy with today's movements. Oh well.

I assume the bond price movements are because of the tentative debt ceiling deal.
If I make a calculation error, #Cruncher probably will let me know.
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Re: [Debt ceiling discussion mega-thread]

Post by rockstar »

Kevin M wrote: Tue May 30, 2023 11:53 am Stocks are flat to down a bit so far today. Bond ETFs are all up, with the longer terms up more (so yields are down).

Image

I've been rooting for higher bond yields, especially TIPS, since I will be receiving some cash soon from a maturing IRA CD that I want to put into TIPS, so not happy with today's movements. Oh well.

I assume the bond price movements are because of the tentative debt ceiling deal.
We still have a Fed meeting with a potential increase and the debt ceiling isn’t resolved yet. Still enough uncertainty to create volatility. Hard to know where bonds will end up. I’m keeping my bond holdings short. The yields are competitive against equities right now.
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Re: [Debt ceiling discussion mega-thread]

Post by exodusing »

Legislation to suspend US debt limit advances to full House of Representatives

The House Rules Committee, voted 7-6 to approve the rules allowing debate by the full chamber.
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Re: [Debt ceiling discussion mega-thread]

Post by exodusing »

rockstar wrote: Tue May 30, 2023 12:22 pm We still have a Fed meeting with a potential increase and the debt ceiling isn’t resolved yet. Still enough uncertainty to create volatility. Hard to know where bonds will end up. I’m keeping my bond holdings short. The yields are competitive against equities right now.
Current indications for June are 60% chance of a 25bp increase, 40% flat.
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Re: [Debt ceiling discussion mega-thread]

Post by rockstar »

exodusing wrote: Tue May 30, 2023 8:54 pm
rockstar wrote: Tue May 30, 2023 12:22 pm We still have a Fed meeting with a potential increase and the debt ceiling isn’t resolved yet. Still enough uncertainty to create volatility. Hard to know where bonds will end up. I’m keeping my bond holdings short. The yields are competitive against equities right now.
Current indications for June are 60% chance of a 25bp increase, 40% flat.
The debt ceiling and Fed meeting are on a collision course. I haven’t heard much chatter about rates from the talking heads. Next week will be interesting. I’m guessing volatility. But so far it hasn’t happened.
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Re: [Debt ceiling discussion mega-thread]

Post by exodusing »

rockstar wrote: Wed May 31, 2023 11:47 am
exodusing wrote: Tue May 30, 2023 8:54 pm
rockstar wrote: Tue May 30, 2023 12:22 pm We still have a Fed meeting with a potential increase and the debt ceiling isn’t resolved yet. Still enough uncertainty to create volatility. Hard to know where bonds will end up. I’m keeping my bond holdings short. The yields are competitive against equities right now.
Current indications for June are 60% chance of a 25bp increase, 40% flat.
The debt ceiling and Fed meeting are on a collision course. I haven’t heard much chatter about rates from the talking heads. Next week will be interesting. I’m guessing volatility. But so far it hasn’t happened.
Odds of a 25bp increase are now 70%. The debt ceiling should be resolved before the Fed meeting, else there be dragons.

Volatility is usually a safe bet. As the famous quote goes, "I think it will fluctuate".
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Re: [Debt ceiling discussion mega-thread]

Post by Kevin M »

My SS payment was deposited today, May 31. The pay date is the 3rd of each month, but since 6/3 is a Saturday, it would have been paid on 6/2 in the past, so I got it 2 days earlier than in the past, as has been the case in recent months.

I guess since the x date has been moved to June 5, this isn't too surprising, but apparently people who normally receive their SS checks before the 5th should be OK.

Interestingly, my mom and stepdad have not received theirs yet. Before last month, they also had been receiving theirs 2 days early as well. I expect that they'll receive theirs by the 2nd.
If I make a calculation error, #Cruncher probably will let me know.
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Re: [Debt ceiling discussion mega-thread]

Post by dual »

The house is scheduled to vote on the debt ceiling bill late today, May 31, 2023.

The Wall Street Journal expects it to pass.

https://www.wsj.com/articles/debt-ceili ... malertNEWS
WASHINGTON—The House prepared to vote on a bill that raises the debt ceiling and reins in government spending, testing Republican Speaker Kevin McCarthy’s ability to keep his party in line as well as Democrats’ willingness to help the GOP get the measure approved.

The bipartisan deal, which is expected to pass despite loud complaints from some conservative Republicans, would be a step toward averting a potential default by the federal government, sending the bill to the Senate where leaders have promised quick action. Treasury Secretary Janet Yellen has said the government could run out of the cash it needs to pay its bills on time on June 5 unless Congress acts.
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Re: [Debt ceiling discussion mega-thread]

Post by kalarama »

Treasury announced a 3-day T-bill auction for tomorrow, maturing 6/5/2023. Guessing this is related to debt ceiling and the June 5th x-date? Any guesses on what the rate could be? Fidelity estimates 5.087%.

It's too short to really matter, but if I have a bunch of money sitting in money market at 4.9%, why not get a few more bucks....

https://www.treasurydirect.gov/instit/a ... 0531_1.pdf
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Re: [Debt ceiling discussion mega-thread]

Post by rkhusky »

kalarama wrote: Wed May 31, 2023 7:10 pm Treasury announced a 3-day T-bill auction for tomorrow, maturing 6/5/2023. Guessing this is related to debt ceiling and the June 5th x-date? Any guesses on what the rate could be? Fidelity estimates 5.087%.

It's too short to really matter, but if I have a bunch of money sitting in money market at 4.9%, why not get a few more bucks....

https://www.treasurydirect.gov/instit/a ... 0531_1.pdf
3 days interest with delta of 0.2% nets you about $1.60 on $100K.
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Re: [Debt ceiling discussion mega-thread]

Post by kalarama »

rkhusky wrote: Wed May 31, 2023 7:25 pm
kalarama wrote: Wed May 31, 2023 7:10 pm Treasury announced a 3-day T-bill auction for tomorrow, maturing 6/5/2023. Guessing this is related to debt ceiling and the June 5th x-date? Any guesses on what the rate could be? Fidelity estimates 5.087%.

It's too short to really matter, but if I have a bunch of money sitting in money market at 4.9%, why not get a few more bucks....

https://www.treasurydirect.gov/instit/a ... 0531_1.pdf
3 days interest with delta of 0.2% nets you about $1.60 on $100K.
Fair. I'm expecting the investment rate to be 5.5% or higher (5/6/23 is currently 5.245% on secondary), which would yield at least $5 for $100k. :)

I have a bunch of cash I'm waiting to put into new treasuries after the debt ceiling is finalized (and anticipating rates to go higher when treasury starts refilling the TGA) so my guess is it'll likely be more than $1.60. ;) Yes, picking up pennies but I don't think there is a steamroller.

Still kicking myself for not picking up 6-7% for June maturities a couple of weeks ago.
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Re: [Debt ceiling discussion mega-thread]

Post by billaster »

$25 billion for three days? They're really digging into the seat cushions for spare change to keep the lights on.
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Re: [Debt ceiling discussion mega-thread]

Post by arcticpineapplecorp. »

Congress just passed HR 3746. Assuming Senate passes their bill too, see ya'll back here in Dec 2025 before the next debt ceiling in Jan 2026.
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Re: [Debt ceiling discussion mega-thread]

Post by z3r0c00l »

Will my Money Market account still be there tomorrow? :moneybag
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Re: [Debt ceiling discussion mega-thread]

Post by rockstar »

arcticpineapplecorp. wrote: Wed May 31, 2023 8:17 pm Congress just passed HR 3746. Assuming Senate passes their bill too, see ya'll back here in Dec 2025 before the next debt ceiling in Jan 2026.
So rates to the moon.
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Re: [Debt ceiling discussion mega-thread]

Post by jnw »

Got my $2500 in cash for the zombie apocalypse lol. I seriously think there is zero chance for default but I figure, what the heck, just in case. Only losing a few dollars interest on it for the two weeks it will be sitting in my desk.

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Re: [Debt ceiling discussion mega-thread]

Post by Stinky »

arcticpineapplecorp. wrote: Wed May 31, 2023 8:17 pm Congress just passed HR 3746. Assuming Senate passes their bill too, see ya'll back here in Dec 2025 before the next debt ceiling in Jan 2026.
I think you’ve got the dates off by a year.

The debt ceiling is suspended until 1/1/2025. So the drama starts again in late 2024.
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Re: [Debt ceiling discussion mega-thread]

Post by rockstar »

Stinky wrote: Wed May 31, 2023 9:55 pm
arcticpineapplecorp. wrote: Wed May 31, 2023 8:17 pm Congress just passed HR 3746. Assuming Senate passes their bill too, see ya'll back here in Dec 2025 before the next debt ceiling in Jan 2026.
I think you’ve got the dates off by a year.

The debt ceiling is suspended until 1/1/2025. So the drama starts again in late 2024.
Lots of drama in 2024. I plan to shut off my social media for most of it. Apps already uninstalled from my phone.

Planning to buy some bonds tomorrow.
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Re: [Debt ceiling discussion mega-thread]

Post by arcticpineapplecorp. »

Stinky wrote: Wed May 31, 2023 9:55 pm
arcticpineapplecorp. wrote: Wed May 31, 2023 8:17 pm Congress just passed HR 3746. Assuming Senate passes their bill too, see ya'll back here in Dec 2025 before the next debt ceiling in Jan 2026.
I think you’ve got the dates off by a year.

The debt ceiling is suspended until 1/1/2025. So the drama starts again in late 2024.
thanks. yeah, musta read that wrong the other day.
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Re: [Debt ceiling discussion mega-thread]

Post by billaster »

$25 billion auction today yielded 6.15% for three days. Friday they will have another auction of $15 billion for one day, to be issued June 5. They really are shaking the pennies out of the piggy bank.
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Re: [Debt ceiling discussion mega-thread]

Post by StrangePenguin »

billaster wrote: Thu Jun 01, 2023 8:44 pm $25 billion auction today yielded 6.15% for three days. Friday they will have another auction of $15 billion for one day, to be issued June 5. They really are shaking the pennies out of the piggy bank.
The Senate just passed the bill. All that’s left is for the President to sign it. I was scouring media reports to see if there was any indication that they would try to take advantage of the fact that tomorrow’s a business day to start refilling Treasury’s coffers but I can’t find anything.
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Re: [Debt ceiling discussion mega-thread]

Post by LadyGeek »

Here's the official information source: H.R.3746 - 118th Congress (2023-2024): Fiscal Responsibility Act of 2023 | Congress.gov | Library of Congress

Status: Passed Senate

As a reminder, this legislation is outside forum guidelines. Please don't discuss content here.
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Re: [Debt ceiling discussion mega-thread]

Post by LadyGeek »

StrangePenguin wrote: Thu Jun 01, 2023 10:16 pm
billaster wrote: Thu Jun 01, 2023 8:44 pm $25 billion auction today yielded 6.15% for three days. Friday they will have another auction of $15 billion for one day, to be issued June 5. They really are shaking the pennies out of the piggy bank.
The Senate just passed the bill. All that’s left is for the President to sign it. I was scouring media reports to see if there was any indication that they would try to take advantage of the fact that tomorrow’s a business day to start refilling Treasury’s coffers but I can’t find anything.
Here's a related discussion: No new issued treasury bill on June 1
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Re: [Debt ceiling discussion mega-thread]

Post by Tom_T »

Last one out on this thread, please shut off the lights. :beer
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Re: [Debt ceiling discussion mega-thread]

Post by dogagility »

Tom_T wrote: Fri Jun 02, 2023 12:29 pm Last one out on this thread, please shut off the lights. :beer
Turn out the lights
The party's over
They say that all
Good things must end
Call it a night
The party's over
And tomorrow starts
The same old thing again :beer
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Re: [Debt ceiling discussion mega-thread]

Post by HomerJ »

You don't have to go home, but you can't stay here. :sharebeer
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Re: [Debt ceiling discussion mega-thread]

Post by LadyGeek »

I removed an off-topic political post.
Tom_T wrote: Fri Jun 02, 2023 12:29 pm Last one out on this thread, please shut off the lights. :beer
Done. :wink:

This thread is now locked. We'll reopen the thread when the debt-ceiling again becomes an investing concern.
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Re: [Debt ceiling discussion mega-thread]

Post by Alex Frakt »

LadyGeek wrote: Fri Jun 02, 2023 1:47 pm This thread is now locked. We'll reopen the thread when the debt-ceiling again becomes an investing concern.
If this farce comes up again when the deal expires in two years, I will be sorely tempted to start a new thread only if the following requirements are met a) no one will be allowed to post on the new thread before reading the entirety of this thread (there will be a test) and b) only arguments or points that have not already been made on this thread will be allowed.

:wink:
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Treasury MM funds and debt ceiling

Post by 4thand11 »

[Thread merged into here --admin LadyGeek]

Apologies if this has been asked before... I currently have most of my emergency fund in the Vanguard Treasury MM fund (VUSXX). I know the debt ceiling has been extended to Jan 2025, so not an immediate issue. However given the political climate in Congress I would say a default, while still unlikely, is much more likely then it has been previously (much will probably depend on the 2024 elections).

Anyway, my question is, could a fund like VUSXX be negatively impacted by a default and should I be thinking about alternatives as the date gets closer?

Should the US not raise the debt ceiling and actually default on the debt, what would happen to money in these funds? Little to nothing, or could it be a major problem?
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Re: [Debt ceiling discussion mega-thread]

Post by LadyGeek »

I merged 4thand11's thread into the ongoing discussion.

The topic remains locked. Please don't start a new discussion.
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Will money market funds be negatively affected in a US debt default scenario?

Post by saver1 »

[Thread merged into here --admin LadyGeek]

If the U.S. for any reason defaults on its debt obligations, what would happen to money market funds? Will they be negatively affected by not being able to retain the $1.00 share value or any other way? I am curious about this. Or would they be unaffected by such a scenario?

Thank you!
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Re: Will money market funds be negatively affected in a US debt default scenario?

Post by pizzy »

Here is an Q&A from Fidelity regarding this very scenario.

PDF: https://www.fidelity.com/bin-public/060 ... -funds.pdf
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Re: Will money market funds be negatively affected in a US debt default scenario?

Post by UpperNwGuy »

Are you contemplating making changes to your portfolio as a result of these fears?
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Re: Will money market funds be negatively affected in a US debt default scenario?

Post by saver1 »

UpperNwGuy wrote: Fri Dec 01, 2023 8:49 am Are you contemplating making changes to your portfolio as a result of these fears?
No, I am just wondering what the outcome could be in such a scenario.
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Re: Will money market funds be negatively affected in a US debt default scenario?

Post by saver1 »

pizzy wrote: Fri Dec 01, 2023 8:48 am Here is an Q&A from Fidelity regarding this very scenario.

PDF: https://www.fidelity.com/bin-public/060 ... -funds.pdf
Thank you, I will read it.
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Re: Will money market funds be negatively affected in a US debt default scenario?

Post by toddthebod »

I'm sure that was discussed in one or more of the 1,280 posts in this thread.
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Re: [Debt ceiling discussion mega-thread]

Post by LadyGeek »

I merged saver1's thread into the ongoing locked discussion.

(Thread remains locked. Please do not start a new discussion.)
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