MNI BRIEF: US Treasury Seeks Input On Reducing T-Bill Supply

The U.S. Treasury Friday said it has asked primary dealers for input on debt projections and whether the department can decrease the supply of Treasury bills without hurting markets.

The Treasury surveyed primary dealers on their expectations through September 2022 for the economy, fiscal policy, and monetary policy including the Federal Reserve's asset purchase program.

The department also asked how potential Biden stimulus and the debt limit that is to be reinstated at the end of July forcing a reduction in the Treasury's cash balance to USD133 billion from USD1.6 trillion may impact bill issuance. The department asked how current T-bill supply as a share of overall marketable debt could be reduced and over what time frame without "adversely affecting short-end market functioning" or resulting "in substantial price adjustment or deviation from fair value."

The queries will be the focus of discussion between the Treasury and primary dealers ahead of their quarterly meeting. The Treasury's next quarterly refunding announcement will take place February 3.