The debt limit has yet to be raised...>

US TSYS/BILLS: The debt limit has yet to be raised and the CBO estimates that

extra-ordinary measures will be exhausted around the middle of October. 

- Tomorrow, Congress enters a recess until Sept 5 and there is little sign that

the debt ceiling problem will be addressed before then. It is looking

increasingly likely that this can may be kicked down the road and only picked up

at the last minute. Yesterday, Mnuchin tried to encourage Congress to act as

every Treasury Secretary before him has tried. 

- On Monday, the 3m bill auction was awful and this tenor is underperforming.

There will be another regular 3m auction next Monday, which will be after

Congressional recess and hence will be more difficult still.

- US 2a-7 money funds cannot buy bonds in which there is a material risk of

default and they shunned such bill in previous episodes of debt-ceiling

shenanigans.

- Keep an eye on the US bill curve over the coming few days.