Debt Ceiling Fears: Treasury Department Postpones Auction Over Borrowing Limit Fears

The Treasury Department postponed the sale of 2-year notes originally scheduled for an Oct. 27 auction over concerns that Congress will fail to raise the national borrowing limit in time to settle the debts. The news comes as a warning signal ahead of a looming Nov. 3 deadline, after which the Treasury Department will struggle to meet national obligations.

Auctions for 5-year and 7-year Treasurys will go as planned, the department said, noting that the 2-year notes pose "less risk for market functioning" than those offerings.

On Wednesday, Treasury Department Secretary Jack Lew said failure to raise the borrowing limit in time could lead to an economic "accident." Failures to promptly raise the debt ceiling in previous years have cost the U.S. billions of dollars in increased borrowing costs, the Government Accountability Office has estimated.

The Treasury Department has warned that it will have only $30 billion by Nov. 3. All eyes are on congressional Republicans, who have been embroiled in a leadership struggle over the past several weeks.