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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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These set the stage for another increase in coupon sizes in the Quarterly Refunding announcement, released on Wednesday at 0830ET.
- We will publish our full Refunding preview later today, but our basic expectations for the outcome are in the table below.
- August's refunding statement came with the note that "further gradual increases will likely be necessary in future quarters" to coupon sizes, and that's what we expect in November.
- The 2Y through 7Y segments are set to be increased by the same amount as in August. The closest calls are at the longer-end, with some potential for the 10Y, 30Y, and (especially) 20Y to see slightly less upsizing than the previous quarter.
- To recap August's refunding, Treasury upped nominal coupon sizes by the following: 2Y +$3B (each month) 3Y +$2B (each month) 5Y +$3B (each month) 7Y +$1B (each month) 10Y +$3B (vs prior qtr's sizes) 20Y +$1B (vs prior qtr's sizes) 30Y +$2B (vs prior qtr's sizes)
- This meant the August refunding month saw $246B in nominal coupon sales: $45B 2Y, $42B 3Y, $46B 5Y, $36B 7Y, $38B 10Y, $16B 20Y, and $23B 30Y.
- MNI expects Nov to see $279B: 2Y $54B (+$3B)3Y $48B (+$2B)5Y $55B (+$3B)7Y $39B (+$1B)10Y $41B (+$3B from Aug)20Y $17B (+$1B from Aug)30Y $25B (+$2B from Aug).
- On the margins, the reduction in the Q4 financing requirement (and the apparent satisfaction that the TGA is now at the right sustainable size following the aggressive post-debt limit rebuild) suggests that bill sizes could be pulled back in the remaining months of this year. We will cover this in more depth in our full PDF preview.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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