The Treasury’s latest debt ceiling update on Friday afternoon was relatively pessimistic.  It urged Congress to address the debt limit by mid-July to avoid potential complications during the scheduled Congressional recess in August.  Our own point estimate continues to be that the Treasury will have enough resources to operate into the first half of September, but point estimates are unreliable this far in advance.  We wouldn’t contest the Treasury’s view that there is a “reasonable chance” that the crunch could come before Labor Day.  Also, this week’s newsletter includes our quarterly tables of foreign bank holdings of reserve balances.  The latest filings suggest that FBOs continue to hold a substantial amount of surplus cash at the Fed that would likely melt away when reserve market conditions tighten in the later stages of the normalization process.