If we see no debt ceiling deal, the US will prioritise Treasuries

As I indicated earlier today:

The U.S. Treasury will give priority to making interest payments to holders of government bonds when due if lawmakers fail to reach an agreement to raise the debt ceiling, according to an administration official.

The official requested anonymity because no announcement has been made. The Treasury has said about $90 billion in debt matures on Aug. 4 and more than $30 billion in interest comes due Aug. 15. Overall, more than $500 billion matures in August

Bloomberg BusinessWeek

The Chinese will be pleased. Holders of other government liabilities, not so much. If it comes to this, expect it to be negative for economic growth.

One Comment

  1. This was the only rational thing for them to say.

    Similiarly, defence contractors will see money long before social security beneficiaries, veterans, hospitals, etc ever do. I wouldn’t be surprised to eventually hear that some hospitals will refuse to treat medicare-eligible patients (beyond what they absolutely must do) until there’s more certainty about payments. American hospitals treat the poor like dirt.