Goldman Sachs Economists' Forecast: Treasury Cash Levels To Dip Below Minimum Level By This Date

Goldman Sachs Group economists have reportedly estimated that by June 8 or 9, the Treasury Department will see its cash levels drop below the $30 billion mark — a level which is considered as the bare minimum for meeting federal obligations falling due.

What Happened: "The estimate is subject to substantial uncertainty so there is certainly a chance that receipts could slow more than expected and leave the Treasury short of cash by June 1 or 2," Goldman economists Alec Phillips and Tim Krupa wrote in a May 19 note to clients, according to a Bloomberg report.

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As of Thursday, the Treasury's cash balance stood at just over $57 billion while the day before, it had about $92 billion of special measures available, it said.

"We are confident that Congress will avoid going past the deadline without action, but there are many paths this could take," the economists wrote. As of Friday, the economists assigned 30% odds of a deal between the two sides this week, along with 30% chances of an agreement "shortly before" the deadline, the report said.

Meeting: President Joe Biden and House Speaker Kevin McCarthy will now meet on Monday to discuss the debt ceiling, following a “productive” phone call as the President headed back to Washington following the G7 meet. Biden had spoken with McCarthy on Sunday about raising the U.S. debt limit. Before leaving Japan, the President said in a briefing that his administration is willing to cut spending as well as raise revenue.

Financial markets are expected to be volatile this week as every statement coming out of the two sides will be keenly watched by market participants. The SPDR S&P 500 ETF Trust SPY closed 0.15% lower on Friday while the Invesco QQQ Trust Series 1 QQQ lost 0.23%, according to Benzinga Pro.

"While we expect a deal to occur ahead of the deadline, we also expect a few more twists along the way, and suspect that markets are likely to price in additional risk before the debt limit is finally raised," the economists wrote, according to the report.

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