Focus at February's Refunding will be on any signals of the issuance path ahead under new Secretary Bessent.
PDF Here:
MNI_US_DeepDive_Issuance_2025_01.pdf
- There aren't expected to be any surprises on upcoming auction sizes, with nominal Treasuries left unchanged for the 4th consecutive quarter.
- But with a new presidential administration comes new leadership at the Treasury, and there will be focus on any signals of the issuance path ahead under new Secretary Scott Bessent.
- The main question is whether Treasury changes its current guidance that it does not "anticipate needing to increase nominal coupon or FRN auction sizes for at least the next several quarters."
- With expectations on this being mixed, the risks run two ways: a softening or removal of this guidance would confirm that higher issuance is coming later this year (consensus is for sizes to be increased in August or November) amid expected fiscal loosening, while leaving it unchanged would likely see long-end Treasuries strengthen modestly in relief.
- Other areas to watch are Treasury's discussion of TGA cash usage and extraordinary measures to stay under the recently-reimposed debt limit, and any signal that they are considering altering the mix of funding (ie more towards the longer-end of the curve and away from bills).
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