Treasury consults dealers amid debt cap brawl

Treasury officials were to meet with the 20 primary dealers of US debt in New York Friday to gauge the market situation © AFP/File

AFP

WASHINGTON (AFP) – The US Treasury said Friday it was consulting with the banks that market US bonds as a political deadlock on the country’s debt ceiling threatened to force it into default.

Treasury officials were to meet with the 20 primary dealers of US debt in New York Friday to gauge the market situation for the next three months and the likely reaction if the United States does not raise its debt ceiling by August 2.

“We are holding regularly scheduled meetings with market participants to discuss developments in the market in advance of our quarterly refunding announcement next week,” the Treasury said in a statement.

“These meetings typically give us an opportunity to hear the latest from those who buy US Treasuries, and we expect them to be particularly useful as we enter a period where Congress has not yet acted to raise the debt ceiling.”

The US had already borrowed up to the statutory $14.3 trillion ceiling in May and has been operating at that level since.

But on August 2, the Treasury says, it will no longer have adequate cash flow to pay all its bills, unless the ceiling is raised by Congress allowing it to borrow more.

That could force it to shut down some government operations and also leave it unable to service its debt.

© AFP — Published at Activist Post with license