The Fed and Treasury have seen enough debt ceilings to develop a playbook that can be pieced together from past FOMC transcripts and Congressional subpoenas. The Fed does not want to interfere in debt ceiling negotiations, which are part of the political process. But a default by Treasury may trigger enough market turmoil to affect financial stability and ultimately prompt Fed action. At the moment, Treasury debt maturing around late October is already exhibiting some …
Published on October 4, 2021 by Joseph Wang Free