US: Johnson Expects Debt Limit Deadline Will Be Postponed Until Summer 2025
Jake Sherman at Punchbowl News reporting on X that House Speaker Mike Johnson (R-LA) said that, "he believes the debt limit will not come due until Summer 2025."
- Bloomberg noted on December 2: "The debt limit will be reinstated on Jan. 2, prompting the Treasury Department to deploy a series of extraordinary measures that include spending down its cash pile and reducing the amount of T-bills it issues to preserve its borrowing capacity."
- Reuters notes similarly: "[Congress] faces a Jan. 1 deadline for raising the federal government's debt ceiling, though lawmakers and aides say that extraordinary measures employed by the Treasury Department are likely to postpone the expected "X" date for default well into 2025."
- Although there is a view in Washington that Donald Trump's election may have neutered the asymmetrical power of House Republicans conservatives, the debt ceiling deadline is likely to renew debates over government spending. The previous debt ceiling negotiations in 2023 resulted in a compromise agreement between former House Speaker Kevin McCarthy and the Biden administration that culminated in McCarthy's ouster and a period of instability in the House of Representatives, which included a protracted series of floor ballots of elect Johnson as the new Speaker.
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US TSYS: Post-Orders Data React
Treasury futures holding gains after this morning's round of largely in-line Factory/Durables/Cap-Goods orders data.
Tsy Dec'24 10Y futures trade +17 at 110-18, still off Friday's post-NFP high of 110-30 (initial technical resistance followed by 111-19.5, 20-day EMA). Curves flatter: 2s10s -3.861 at 13.343, 5s30s -1.221 at 33.940.
**MNI: US SEP FACTORY ORDERS -0.5%; EX-TRANSPORT NEW ORDERS +0.1%
- MNI: US SEP FACTORY ORDERS -0.5%; EX-TRANSPORT NEW ORDERS +0.1%
- US SEP DURABLE ORDERS -0.7%
- US SEP NONDEFENSE CAP GOODS ORDERS EX AIRCRAFT +0.7%
GILTS: Early Highs Intact, Yields Back To Little Changed
Gilt futures respect this morning’s high after drawing support from the early NY rally in Tsys.
- Contract remains comfortably within Friday’s range as a result, last +22 at 94.16, session high at 94.34, session low at 93.70.
- Bearish technicals remain in play.
- Initial support at last week’s low (93.10), while initial resistance is seen at Friday’s high (94.73).
- Yields flat to 1bp higher, curve a touch steeper.
- Last week’s yield highs untouched across the curve.
- 2s10s back above 0bp over the last couple of days, with early October lows untested during recent flattening episodes.
- 5s30s ~6bp off last week’s multi-month low, last 58.5bp.
- A reminder that the DMO will outline its agenda for the FQ4 (Jan-Mar) investor/GEMM consultation at 15:30GMT. We set out our expectations for the gilts on offer on pages 5-7 of our Budget Review ( https://mni.marketnews.com/4huHifX ).
- SONIA futures -1.0 to +4.0.
- BoE-dated OIS little changed on the day, showing 22bp of cuts for November, 30bp through December, 58bp through March and 77bp through June.
- BoE decision due Thursday, all 54 surveyed by BBG look for a 25bp cut. BMO the only name looking for no change (that we have seen).
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
Nov-24 | 4.730 | -22.0 |
Dec-24 | 4.648 | -30.2 |
Feb-25 | 4.463 | -48.7 |
Mar-25 | 4.373 | -57.7 |
May-25 | 4.228 | -72.2 |
Jun-25 | 4.183 | -76.7 |
Aug-25 | 4.097 | -85.4 |
Sep-25 | 4.076 | -87.4 |
Nov-25 | 4.036 | -91.4 |
Dec-25 | 4.019 | -93.1 |
