Highlights
The Treasury raised its quarterly refunding package to $112 billion, up $9 billion from $103 billion last time, to refund $102.2 billion in Treasury notes and bonds maturing on Nov. 15, 2023, and raise $9.8 billion in new cash from private investors.
Markets were generally expecting a slightly larger increase of $11 billion to $114 billion from last quarter's $103 billion total. The refunding totaled $96 billion in May, and yields jumped notably after the August refunding announcement.
The latest refunding package consists of $48 billion in 3-year notes, $40 billion in 10-year notes, and $24 billion in 30-year bonds. The balance of the funding needs will be met with the weekly T-bill auctions, cash management bills (CMBs), the monthly note, bond, Treasury Inflation-Protected securities (TIPS) auctions, and 2-year Floating Rate Note (FRN) auctions.
"Treasury plans to continue with gradual nominal coupon and FRN auction size increases, but at a more moderate rate in longer-dated tenors," the refunding announcement said.
Treasury plans to increase 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. 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 January 2024.
Treasury plans to increase both the new issue and the reopening auction size of the 10-year note by $2 billion and the 30-year bond by $1 billion. Treasury plans to maintain the 20-year bond new issue and reopening auction size. Treasury plans to increase the November and December reopening auction size of the 2-year FRN by $2 billion and the January new issue auction size by $2 billion.
Treasury said it is considering whether to change the regular 6-week cash management bill to benchmark status and will announce its decision at an upcoming refunding. In the meantime, Treasury said it will continue to supplement its benchmark bill financing with weekly issuance of the 6-week CMB, at least through the end of March 2024.
Regarding buybacks, Treasury said it plans to provide an update at the next refunding announcement on its plans to implement a regular buyback program.
Markets were generally expecting a slightly larger increase of $11 billion to $114 billion from last quarter's $103 billion total. The refunding totaled $96 billion in May, and yields jumped notably after the August refunding announcement.
The latest refunding package consists of $48 billion in 3-year notes, $40 billion in 10-year notes, and $24 billion in 30-year bonds. The balance of the funding needs will be met with the weekly T-bill auctions, cash management bills (CMBs), the monthly note, bond, Treasury Inflation-Protected securities (TIPS) auctions, and 2-year Floating Rate Note (FRN) auctions.
"Treasury plans to continue with gradual nominal coupon and FRN auction size increases, but at a more moderate rate in longer-dated tenors," the refunding announcement said.
Treasury plans to increase 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. 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 January 2024.
Treasury plans to increase both the new issue and the reopening auction size of the 10-year note by $2 billion and the 30-year bond by $1 billion. Treasury plans to maintain the 20-year bond new issue and reopening auction size. Treasury plans to increase the November and December reopening auction size of the 2-year FRN by $2 billion and the January new issue auction size by $2 billion.
Treasury said it is considering whether to change the regular 6-week cash management bill to benchmark status and will announce its decision at an upcoming refunding. In the meantime, Treasury said it will continue to supplement its benchmark bill financing with weekly issuance of the 6-week CMB, at least through the end of March 2024.
Regarding buybacks, Treasury said it plans to provide an update at the next refunding announcement on its plans to implement a regular buyback program.
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.
