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Borrowing Requirement Estimates Set To Rise, But Watch QT (1/2)

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The US Treasury's quarterly refunding process begins later today (1500ET/2000BST) with the release of quarterly financing estimates. This includes expected marketable borrowing requirements through September. MNI's full Refunding preview will be released on Tuesday ahead of Wednesday's Quarterly Refunding Announcement release.

  • Recall that in the February refunding round, Treasury estimated a quarterly total financing need of a net negative $71B, with $202B in overall estimated marketable borrowing. This also assumed no change in the level of cash in the Treasury General Account ($750B) and $197B in Fed SOMA redemptions, i.e. QT.
  • Opinion is mixed on whether Treasury will raise its marketable borrowing estimates for the current (April-June) quarter, with some seeing it pulling back on the basis of strong tax receipts in April ($160-190B borrowing requirement). Some analysts, particularly those who see the recent tax take as less impressive, see the marketable borrowing requirement estimate at upwards of $250B.
  • However, the varying opinions depend in part on what analysts think Treasury will assume for both the change in cash in the TGA (upward changes would require higher levels of borrowing), and crucially, for redemptions under Fed QT. Some analysts who see a decrease in the borrowing requirement estimate also think Treasury will assume the start of a QT taper in May/June, which would reduce the $170B+ in redemptions in recent quarters and therefore the amount Treasury needs to raise from markets.
  • MNI assumes that there will be no such assumption of a taper made this week, which means that the figure that Treasury publishes for assumed net borrowing from the private sector could overstate the actual amount they need to borrow from markets.
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The US Treasury's quarterly refunding process begins later today (1500ET/2000BST) with the release of quarterly financing estimates. This includes expected marketable borrowing requirements through September. MNI's full Refunding preview will be released on Tuesday ahead of Wednesday's Quarterly Refunding Announcement release.

  • Recall that in the February refunding round, Treasury estimated a quarterly total financing need of a net negative $71B, with $202B in overall estimated marketable borrowing. This also assumed no change in the level of cash in the Treasury General Account ($750B) and $197B in Fed SOMA redemptions, i.e. QT.
  • Opinion is mixed on whether Treasury will raise its marketable borrowing estimates for the current (April-June) quarter, with some seeing it pulling back on the basis of strong tax receipts in April ($160-190B borrowing requirement). Some analysts, particularly those who see the recent tax take as less impressive, see the marketable borrowing requirement estimate at upwards of $250B.
  • However, the varying opinions depend in part on what analysts think Treasury will assume for both the change in cash in the TGA (upward changes would require higher levels of borrowing), and crucially, for redemptions under Fed QT. Some analysts who see a decrease in the borrowing requirement estimate also think Treasury will assume the start of a QT taper in May/June, which would reduce the $170B+ in redemptions in recent quarters and therefore the amount Treasury needs to raise from markets.
  • MNI assumes that there will be no such assumption of a taper made this week, which means that the figure that Treasury publishes for assumed net borrowing from the private sector could overstate the actual amount they need to borrow from markets.