MNI: US Treasury To Cut Auction Sizes in May-July Quarter

The U.S. Treasury Wednesday said it plans to continue reducing auction sizes of coupons during the May-July quarter, but by smaller increments than in previous quarters, and left open the door for additional cuts in future quarters if needed.

The department will issue USD103 billion of securities at next week's quarterly refunding, raising USD55.2 billion in new cash. Officials say they plan to sell USD45 billion in 3-year notes on May 10, USD36 billion in 10-year notes on May 11, and USD22 billion in 30-year bonds on May 12.

The Treasury said it expects to cut the size of 2-, 3- and 5-year note auctions by USD1 billion each per month over the coming quarter, while 7-year auctions will be cut by USD2 billion per month in the same period.

TEN YEAR

New and reopened 10-year note and 30-year bond auctions will also be reduced by USD1 billion, while the 20-year bond auctions will be cut by USD2 billion. Treasury said it will likely maintain 2-year floating-rate note auctions at prior levels, and the agency plans to transition the 4-month bill to benchmark status.

In total, the cuts are expected to reduce issuance by USD69 billion in the May to July quarter compared to the previous quarter.

"Additional reductions in future quarters may be necessary depending on future developments in projected borrowing needs," said Assistant Secretary for Federal Finance Brian Smith in a statement. A stronger than expected increase in tax receipts has left the agency with an over USD970 billion cash balance.

Anticipated Auction Sizes (billions USD)