Marketable Borrowing Preview: Q1 2024 Ests Vary (2/3)

August's refunding estimates for Oct-Dec are naturally looking stale as we're already through one month of the quarter - though there is not much consensus on how much it might change, the basic expectation is that it comes in around, or lower, than the previously projected $852B.

• The forecast $852B was made up of $171B in Fed SOMA redemptions on QT, $100B in an increased cash balance, and $581B other financing requirements. To translate that to the table in the previous note (which will be the same format as Treasury's announcement later today): Treasury had anticipated a $487B financing requirement for the quarter, with the $852B in marketable borrowing offset by $265B in negative "all other financing", leaving $587B in net borrowing minus $487B in financing needs = $100B increase to quarter-end cash to $750B from $650B at end-Sept.
• The actual end-Sept TGA cash balance of $657B was $7B higher than anticipated and means all else being equal the $852B marketable borrowing estimate for the current quarter would be adjusted downward for that reason to $845B. That also assumes that the end-year cash balance estimate remains $750B of course.
• If the end-Q4 cash level is bumped higher - or Treasury sees weaker fiscal dynamics than expected - then these would be reasons to anticipate a higher marketable borrowing requirement. If Treasury sees tax timings as helping the Q4 fiscal picture, and sees TGA levels at/below $750B, then there could be a downward shift from $852B.