An auction of two-year Treasury Department notes planned for next week will not take place because of fears that the federal debt ceiling will not be raised.
The Treasury announced Thursday that it was canceling the auction because it was not sure that it would be able to deliver the notes when they would be owed to investors on Nov. 2, just one day before Secretary Jack Lew has said he will be unable to issue any more debt, given the contstraints of the debt ceiling.
Unless Congress raises the $18.1 trillion debt ceiling, the Treasury does not have authority to borrow money by issuing more debt. For the past several months, Lew has been managing government accounts to allow himself to issue new securities, but he's running out of options.
Thursday's announcement is a sign that the endgame for congressional action is near. The GOP-led Congress, currently searching for a successor to John Boehner as speaker of the House, has yet to outline a strategy for attaching legislative demands to the debt ceiling increase. Meanwhile, the White House has said that it will not negotiate over the vote, and has demanded a clean hike in the debt ceiling.
The Treasury said it was preemptively canceling the auction of the two-year note in order to allow auctions of five- and seven-year notes to go on as scheduled, a course of action it determined "poses less risk for market functioning."Read more on WashingtonExaminer.com