Highlights
The Treasury raised its quarterly refunding package to $103 billion, up from $96 billion last time, to refund $84 billion in Treasury notes and bonds maturing on Aug. 15, 2023, and raise $19 billion in new cash from private investors.
The refunding package consists of $42 billion in 3-year notes, $38 billion in 10-year notes, and $23 billion in 30-year bonds. The rest of the funding needs will be met with weekly T-bill auctions, cash management bills, the monthly note, bond, Treasury Inflation-Protected securities (TIPS) auctions, and 2-year Floating Rate Note (FRN) auctions.
The Treasury said it plans to increase coupon auction sizes gradually beginning in the August to October 2023 quarter, and more increases will likely be necessary in future quarters."The scale of these increases will depend on a variety of factors, including the evolution of the fiscal outlook and the pace and duration of future SOMA redemptions," it said.
Treasury plans to raise the auction sizes of the 2- and 5-year by $3 billion per month, the 3- year by $2 billion per month, and the 7-year by $1 billion per month. As a result, the auction sizes of the 2-, 3-, 5-, and 7-year will increase by $9 billion, $6 billion, $9 billion, and $3 billion, respectively, by the end of October 2023.
Treasury plans to increase both the new issue and the reopening auction size of the 10-year note by $3 billion, the 30-year bond by $2 billion, and the $20-year bond by $1 billion. Treasury plans to increase the August and September reopening auction size of the 2-year FRN by $2 billion and the October new issue auction size by $2 billion.
Regarding TIPS, Treasury said it expects incremental increases to TIPS auction sizes starting with the October 5-year new issue. Treasury said it will monitor TIPS demand and liquidity to determine the appropriate mix of increases in TIPS auctions sizes in future quarters. Over the August to October 2023 quarter, Treasury plans to maintain the August 30-year TIPS reopening auction size at $8 billion and to maintain the September 10-year TIPS reopening auction size at $15 billion. Treasury plans to increase the October 5-year TIPS new issue auction by $1 billion to $22 billion.
Regarding buybacks, Treasury said it has made progress in planning for regular buybacks starting in 2024, and today it published a detailed presentation on the buyback program design on treasury.gov. It plans to continue gathering feedback from market participants on the best way to conduct the buybacks.
A senior Treasury official briefing reporters on the package declined comment on the Fitch Ratings downgrade of the US long-term foreign-currency issuer default rating. Treasury Secretary Janet Yellen late Tuesday called the downgrade"arbitrary" and based on"outdated information."
The rating was cut to AA+ from AAA. Fitch's Rating Watch Negative was removed and a stable outlook assigned. The country ceiling was affirmed at AAA.
The refunding package consists of $42 billion in 3-year notes, $38 billion in 10-year notes, and $23 billion in 30-year bonds. The rest of the funding needs will be met with weekly T-bill auctions, cash management bills, the monthly note, bond, Treasury Inflation-Protected securities (TIPS) auctions, and 2-year Floating Rate Note (FRN) auctions.
The Treasury said it plans to increase coupon auction sizes gradually beginning in the August to October 2023 quarter, and more increases will likely be necessary in future quarters."The scale of these increases will depend on a variety of factors, including the evolution of the fiscal outlook and the pace and duration of future SOMA redemptions," it said.
Treasury plans to raise the auction sizes of the 2- and 5-year by $3 billion per month, the 3- year by $2 billion per month, and the 7-year by $1 billion per month. As a result, the auction sizes of the 2-, 3-, 5-, and 7-year will increase by $9 billion, $6 billion, $9 billion, and $3 billion, respectively, by the end of October 2023.
Treasury plans to increase both the new issue and the reopening auction size of the 10-year note by $3 billion, the 30-year bond by $2 billion, and the $20-year bond by $1 billion. Treasury plans to increase the August and September reopening auction size of the 2-year FRN by $2 billion and the October new issue auction size by $2 billion.
Regarding TIPS, Treasury said it expects incremental increases to TIPS auction sizes starting with the October 5-year new issue. Treasury said it will monitor TIPS demand and liquidity to determine the appropriate mix of increases in TIPS auctions sizes in future quarters. Over the August to October 2023 quarter, Treasury plans to maintain the August 30-year TIPS reopening auction size at $8 billion and to maintain the September 10-year TIPS reopening auction size at $15 billion. Treasury plans to increase the October 5-year TIPS new issue auction by $1 billion to $22 billion.
Regarding buybacks, Treasury said it has made progress in planning for regular buybacks starting in 2024, and today it published a detailed presentation on the buyback program design on treasury.gov. It plans to continue gathering feedback from market participants on the best way to conduct the buybacks.
A senior Treasury official briefing reporters on the package declined comment on the Fitch Ratings downgrade of the US long-term foreign-currency issuer default rating. Treasury Secretary Janet Yellen late Tuesday called the downgrade"arbitrary" and based on"outdated information."
The rating was cut to AA+ from AAA. Fitch's Rating Watch Negative was removed and a stable outlook assigned. The country ceiling was affirmed at AAA.
Definition
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.
Description
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.
