Citi analysts said in "Debt........>

US TSYS/RESEARCH: Citi analysts said in "Debt Ceiling Redux" that "Congress has

only weeks to decide on the fate of the debt ceiling ahead of the "hard"

deadline. Our range for the "X-date" is Oct. 2 through 12." 

- They cited risks, and said "we anticipate the debt ceiling will be suspended

until a later date. Raising the ceiling is an option, but is less likely given

the partisan atmosphere, in our view. We assign a very low probability of

default. However, both the Treasury and the Fed have options to forestall the

"hard" default date."

- They expect US "rates to rally on political uncertainty going into the ceiling

and selloff upon the resolution. On short-ends, we expect the impact mostly via

large bill issuance upon the resolution."

- They have such trading strategies as recommending "buying 2m10y swaption

straddles going into the ceiling. On short-ends, we like OIS/1.5Y UST spread

tightener and front-end JPY/USD XCCY receiver around the December turn."