Goldman Sachs warns The US Treasury's Cash Holdings Will Fall below the Lower Limit on June 8 or 9

Goldman Sachs economists estimate that by June 8 or 9, the U.S. Treasury's cash level will fall below $30 billion, the minimum it has implied to pay maturing federal debt. "Estimates are subject to significant uncertainty, so it is certainly possible that revenues will slow more than expected" Goldman Sachs analysts Alec Phillips and Tim Krupa wrote in a May 19 note to clients. There will be a cash shortage before the 1st or 2nd of March."

Confined by the $31.4 trillion debt ceiling, the U.S. Treasury Department has been steadily reducing its cash balance to meet federal government spending and has been unable to increase net borrowing from the public. U.S. Treasury Secretary Janet Yellen repeated her warning in an interview on Sunday, saying the Treasury could exhaust special measures to keep debt under the ceiling as soon as June 1.

The U.S. Treasury had a cash balance of just over $57 billion as of last Thursday. It also had about $92 billion in special measures available as of the previous day.

As of Friday, they were pricing in a 30 percent chance that the two sides would reach a deal in Washington last week and a 30 percent chance of a deal "shortly before" the deadline.

While financial markets are showing only limited signs of broader concern about the moment the U.S. Treasury is about to run out of abundant cash, volatility is likely to remain elevated, Phillips and Krupa wrote. "While we expect an agreement to be reached by the deadline, we also expect some bumps along the way and believe that markets are likely to price in additional risk before an eventual debt ceiling increase," they wrote.