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US TSYS/SUPPLY
Yesterday's surprising increases in bill sizes for the upcoming 4-/8-/17 week bill auctions suggest that there will be more upsizing in store, per Wrightson ICAP.
- They are now pencilling in a $5B increase in 6-week and $2B in each of the 13- 26- and 52-week bills (the latter of which is routine), to be announced tomorrow (sales on Oct 2-3), with at least one round of across-the-board increases in early October.
- They note that the earlier-than-expected rise in bill sizes will "smooth out the path of bill issuance in the coming weeks". They had expected Treasury to allow the $185B in cash management bills issued at the time of the debt ceiling limit crisis to roll off upon maturity in Oct and Nov, thus slowing the growth of bill supply, but "that was before the shortfall in the TGA last week. The Treasury apparently wanted to bolster its average cash position in October, and thus was moved earlier than we expected to increase its bill offerings."
- Note Treasury pencilled in an end-Sept TGA balance of $650B as of the August refunding announcement, with a end-year cash balance target of $750B. The Sep 25 closing level of $690B exceeds the month-end target but this is set to drop on month-end outflows.
Source: US Treasury
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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