Lower End-Jun Cash Estimate Eases Pressure On Rebuild (2/2)

A few thoughts on Treasury's cash management / issuance update:

• No surprise that Treasury is leaning heavily on bills to replenish the cash supply; any increase in coupon sizes will have to wait until the end-Jul/early Aug refunding process for any announcement.
• More surprising is the introduction of a 6-week cash management bill tenor, with first announcement tomorrow. The 6-week time period may be a coincidence but it's also the space between FOMC decisions, so it may appeal to bill buyers who are looking to limit rate risk.
• The expected path of the immediate cash raise is less aggressive than many had expected: while the $550B signalled at the May refunding for end-Jun was always going to be too aggressive, $425B (roughly $300B from where Treasury expects the cash balance to be on Jun 14, to be met in large part by Jun 15 tax receipts) appears to represent a manageable ramp-up.
• Certainly, it seems on the softer side of analyst expectations we've seen, which were closer to $500B.
• And signalling expectations for a further rise in July and pullback in August (without any hard estimates), with $600B by end-Sep implied by the May refunding estimates, offers reasonable flexibility and should help mitigate some of the panic surrounding fears about rapid liquidity drains.
• Onto Thursday's coupon (3Y/10Y30Y) and bill (13W/26W/52W/and now, 6W CMB) announcements for next week's auctions.