BTA2023 The U.S. Treasury Department said on Wednesday it does not anticipate increasing auction sizes for notes and bonds for at least the next several quarters, in line with market expectations, as it announced a $125 billion refunding from November 2024 to January 2025.
The department will refund about $116.4 billion of privately held Treasury notes and bonds maturing on Nov. 15 to raise new cash of $8.6 billion from private investors.
The Treasury will sell $58 billion in U.S. three-year notes, $42 billion in 10-year notes, and $25 billion in 30-year bonds next week. These were the same auction sizes for the same securities announced at the July refunding.
“The refunding was pretty much close to our expectations. There could have been a small tweak to the guidance because ‘at least for the next several quarters’ is quite open to interpretation,” said Angelo Manolatos, a macro strategist at Wells Fargo Securities.
“To us, we think that the Treasury is well-funded to meet its borrowing needs and current auction sizes are sufficient until November 2025, a time when we think the Treasury can increase them.”
The U.S. Treasury said on Monday it plans to borrow $546 billion in the fourth quarter, $19 billion less than the July estimate, and another $823 billion in the first quarter of 2025. It assumes an end-December cash balance of $700 billion and an end-March cash balance of $850 billion.
Treasury Assistant Secretary for Financial Markets Joshua Frost, in a briefing following the refunding statement, said the borrowing plans for the quarter assume that Congress approves a “timely” increase or suspension in the debt ceiling. The current extension, approved in June 2023, expires on Dec. 31.
Members of the Treasury Borrowing Advisory Committee (TBAC), who met with the U.S. Treasury before the refunding announcement, expressed concern about the borrowings for 2025 and 2026. Minutes of the meeting showed that primary dealer estimates for the next two fiscal years were marginally higher than the previous forecasts.
