Markets don't believe Yellen's warning that the US government will be out of money by June 1, Jim Bianco says
- Markets don't seem to believe Janet Yellen's warning that the X-date - when the US government would run out of cash - is June 1, Jim Bianco said.
- "All signs point to more time than June 1," he tweeted Thursday.
Investors don't believe Treasury Secretary Janet Yellen's warning that the US government could run out of money and be unable to pay its debts by June 1 if Congress doesn't resolve the borrowing-limit standoff, according to Wall Street analyst Jim Bianco.
The so-called X-date - when the Treasury will run out of cash - is further away than Yellen has suggested, according to the Bianco Research president, who referenced an analysis by another Twitter user suggesting the date could fall later in June or even in July.
Yellen has repeatedly urged lawmakers to act on the borrowing limit - and warned that failing to raise the debt ceiling in time could result in a "catastrophe" for the US economy.
The Treasury bill market is acting like something has changed, and traded this week as if the X-date will be later than June 1, according to Bianco.
"All signs point to more time than June 1. So, the market does not believe Yellen about this date. If this is still the date, she can no longer just say it. She has to show her homework," he said in a lengthy Twitter thread on Thursday.
Bianco also referenced an analysis from Donald Schneider, deputy head of U.S. policy at investment bank Piper Sandler, who projected that after deploying all extraordinary measures the Treasury could squeeze the X-date out to June 9, but would just have $2 billion in cash left on hand.
"This is like you and me running our checking account down to $2, no room for error," the analyst said.
If these estimates are indeed correct, the US lawmakers who are negotiating the debt-limit may have several more days to come to an agreement, according to him.
"The lack of urgency suggests they think they have more time than June 1 (cannot write the bill, give 72 hours to read it and pass it in 6 days)," Bianco concluded in the thread.
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