Reuters writes "U.​S. money funds held 20 pct T-​bills due to October - Citi." It says, "U.​S. money market funds at the end of July held $​63 billion, or 20 percent, of outstanding Treasury bills due in October, when the government faces a deadline to increase the federal debt limit, according to Citi analysts. Yields on T-​bills due in October have risen in the absence of a deal by lawmakers to raise the statutory borrowing cap, and they could rise more if members of Congress do not reach an agreement to raise the debt ceiling when they return from their summer recess next week, the analysts said in a research note published late Friday. They noted that money market fund managers had been slow to act on their bill holdings ahead of new industry rules going into effect last year. "Given that the MMF (​money market fund) community started clearing up at-​risk bill issuance just 2-​3 weeks going into the reform, we may see further sales going forward," they wrote. "Of course, some of that dynamic may be behind us since the data is as of end of July." On Friday, October T-​bill yields ended about 8 basis points to 20 basis points higher than yields on issues maturing in September and November, Reuters and Tradeweb data showed." The piece adds, "Until a deal is clinched, the T-​bill market is vulnerable to further selling by money funds, whose ownership of T-​bills increased last year as a number of them converted into government-​only funds in response to tighter regulations. "​We believe that default is highly unlikely but think the Oct bill dislocation can grow further," Citi analysts wrote."

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