Yellen Lowers Borrowing Estimates as Debt Ceiling Expires

U.S. Treasury Secretary Janet Yellen is working to avoid default after Congress failed to extend the suspension of the debt ceiling.

Yellen told Congress that the department is taking extra steps to ensure this, expressing in a written letter to lawmakers that resolving the issue would be the better choice.

Yellen is urging Congress to act as soon as possible on suspending the debt ceiling after its two-year suspension expired by the beginning of August.

The United States Department of the Treasury has lowered the estimates of public borrowing during the third quarter of the year to $673 billion.

The estimated amount is lower by $148 billion compared with previous estimates, due to lower public expenditure, with an estimated cash balance of $750 billion by the end of September.

In the fourth and final quarter of the year, the Treasury expects borrowing $703 billion and a cash balance of $800 billion.

The U.S. Treasury Department could run out of cash to pay bills in October or November, if the debt limit is not increased, according to estimates by the Congressional Budget Office.

Earlier today, the benchmark 10-year Treasury bond yield fell below 1.15%, hitting its lowest level in about six months, before rebounding alongside other debt instruments.

It is worth noting that the issue comes at a time when there is already a partisan disagreement between Democrats and Republicans over the proposed public expenditure plans by President Joe Biden.

The Biden administration is pushing for passing a $1 trillion bipartisan infrastructure bill and a $3.5 billion budget.