US debt explosion may force the Fed to halt a key tightening campaign so the financial system doesn't become unstable

• The Treasury's deluge of T-bills could force the Federal Reserve to halt quantitative tightening.
• That's as the debt binge may pressure bank reserves, economists at the St. Louis Fed wrote.
• The Treasury has issued $1 trillion in T-bills since June, and another $600 billion is expected by year's end.

The US debt binge may force the Federal Reserve to halt its quantitative tightening campaign so the financial system doesn't become unstable, according to economists at the St. Louis Fed.

The Treasury Department has issued $1 trillion in T-bills since June, when the debt ceiling standoff was resolved, and another $600 billion is expected by year's end.