The Treasury Dept. has now moved into "shuffle" mode as cash flow realities bump into debt ceiling fantasies. The debt ceiling is not some arbitrary number with a boat load of zeroes set by Congress. That number, which will be moved soon, is a political joke.
The "debt ceiling" term should be replaced with the more accurate, yet amorphous term "breaking point." European nations are dealing with the reality of hitting their debt ceilings. The level is the inflection point when markets will no longer absorb the supply and hold the paper. The situation in America is dramatically different. The Treasury, with the Fed at its back, has barely suffered a basis point tail in placing its obligations. We won't even get a glimpse of clarity until after June and QE2.
Summer promises much more than sun burns and Neapolitan waffles on the boardwalk. Rates markets will have to be given some opportunity to weigh in on the issuance deluge. This is the only true test of our proximity to the debt ceiling/breaking point. The US can glimpse into the future by observing the EU mess. That bond markets are rebelling buries the lead. The problem was germinated when large amounts of debt was placed at artificially low rates and tight spreads. Sound familiar?