In the wake of Washington’s agreement last month to suspend the debt limit until 2025, Treasury has issued roughly $814 billion in securities on net in order to juice its cash balance.

• So far, investors have easily digested the first wave of supply, with money-market mutual funds absorbing roughly two thirds of the issuance by yanking $400 billion from the Federal Reserve’s overnight reverse repurchase agreement facility.
• Yet the cash balance is still below levels that are considered to be normal for this time of year.

What’s Next: Wall Street’s ravenous appetite for government bills is about to be tested once again, as the Treasury is likely to further ramp up the size of oncoming auctions to rebuild its decimated cash buffer.

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