November's Treasury Refunding announcement saw no changes to auction sizes, but underlined fiscal uncertainty ahead.
The November Treasury Refunding announcement brought limited surprises for the upcoming quarter (Nov-Dec-Jan) but highlights significant uncertainty about the outlook in calendar 2025 stemming from a continued deterioration in the fiscal outlook and higher financing costs.
- The upcoming quarter's nominal coupon auction sizes were - as unanimously expected - unchanged.
- Guidance was also (as largely but not unanimously expected) reaffirmed that auction sizes were not foreseen to change for "at least the next several quarters".
- The policy statement acknowledged significant uncertainty ahead, though.
- The prevailing expectation continues to be that the next upsizing will be no earlier than August 2025, with November 2025 looking like a central view.
- Some of this will be dependent on the timing of the lifting of the debt limit (which returns in January), but we haven't seen any expectations that Treasury will wait beyond early 2026 to increase sizes, given large budget deficit expectations.
- Auction Results: October's nominal coupon auctions were relatively weak, with 5 of 7 sales scoring negatively on MNI's Relative Strength Indicator. The two that didn't - the 7Y and 30Y - were unusually strong in their own right.
- Upcoming Supply: November is set to see $324B in nominal Treasury coupon sales, in addition to $17B in 10Y TIPS and $28B FRN for a total of $369B – unchanged from the previous month, for the joint-highest since Oct 2021.
MNI's review includes a calendar of upcoming auctions and buyback operations.
Please see PDF for full analysis:
MNI_US_DeepDive_Issuance_2024_10.pdf
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