US TSYS/SUPPLY: Lack Of Refunding Guidance Shift Puts 2025 Upsizings In Question

Treasury's decision to leave issuance size guidance unchanged (“anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters.”) has been the main topic of discussion out of the February refunding, with the main impact being that analysts are questioning whether Treasury will increase coupon sizes at all this year. We previously covered TD Securities' changed view for the first coupon auction upsizing to come in November 2025, vs August previously - a few more notes here:

• Wrightson ICAP "were mildly surprised that the Treasury reiterated the guidance ...  We had wondered whether the Treasury would be sufficiently confident in the outlook to retain that phrase, which implies unchanged nominal coupon auction sizes at least until the first quarter of next year. In our own projections, it seems quite possible that the Treasury’s coupon auction sizes could hold steady into 2026 without an excessive increase in the supply of bills – but only if the Treasury lowers its TGA targets substantially in the coming quarters.  That’s certainly a plausible outcome, but we don’t want to suggest that any final decisions have been made.  The outlook still seems fluid."
• BMO FICC takes special note of Treasury's decision to hold guidance steady despite TBAC's recommendation to change/drop the language: "It’s tempting to take this as an especially strong pushback against the widely held supply concerns. We’ll offer the observation that Bessent has only been in his new seat since last Tuesday, so there might be more meaningful changes afoot in the coming quarters than one might have assumed by interpreting the statement at face value. Admittedly, we might be predisposed to reading too much into the degree to which the incoming Treasury Secretary desires to be a change-agent for borrowing policy...While this suggests that increases to coupon auction sizes may not be needed until 2026, we wouldn’t rule out an upsizing in late-2025 in light of the uncertainty around the fiscal outlook and the fact that Bessent has only been in office since last Tuesday."
• Morgan Stanley's view hasn't changed since pre-Refunding: "We continue to expect no increases to nominal coupon or FRN auction sizes over the remaining refunding quarters in 2025."