BA/ML analyst Mark Cabana..........>

US TSYS/RESEARCH: BA/ML analyst Mark Cabana believes Tsy "will run out of

funding associated with the debt limit in the first half of Oct. with risks most

elevated the "X" date is reached in early October. According to Tsy's July

statement of the public debt, Tsy has used $310 bn of its $376 bn in

extraordinary measures or 82% of its total available headroom. We expect that

exhaustion of this headroom should result in Tsy beginning bill supply cuts

towards the end of August or early September and likely total between $100 and

$150 bn."

- He adds "once the debt limit is resolved, we expect a rapid increase in bill

offerings that could total upwards of $380-$400 bn. Tsy has stated their

intention to raise $501bn through marketable borrowing in the 4Q and it seems

likely that Tsy will only be able to raise $100-$120bn in coupons over this

period, which means that the rest of the funding shortfall would need to be made

up through bills. This would represent one of the largest Tsy bill supply builds

in recent years."