US: Treasury Refunding Announcement

Wed Nov 04 07:30:00 CST 2015

No surprises in the Treasury's quarterly refunding announcement, a $64 billion total that will raise $3.6 billion in new cash. The refunding is split, as it has been in recent quarters, between $24 billion in 3-year notes, $24 billion in 10-year notes, and $16 billion in 30-year bonds. For this quarter, the Treasury says it will maintain current sizes of coupon issues as well as the sizes of its monthly 2-year floating rate note and its run of TIPS issues. For the first quarter, the Treasury may raise the size of its T-bill issuance in increases that would be offset by decreases in coupon issues. The Treasury is considering issuing a 2-month T-bill and is seeking feedback from dealers. Another buyback, which again will be small in size, will be tested over the next six months.

Each quarter the U.S. Treasury announces its funding needs for the next two quarters. The announcement includes which securities will be offered and the dates of their announcement, auction and settlement.

Bond market players pay attention to this release so that they know the degree of looming supply of Treasuries coming onto the market so that they can evaluate what appropriate yields might be for trading. Heavy supply coming onto the market suggests higher yields.