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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.
US TSYS/SUPPLY
Treasury's quarterly refunding announcement on Aug 2 is increasingly expected to bring with it an increase in coupon sizes, more or less across the board. This would mark the first time since Feb 2021 that Treasury has upped sizes.
- As it stands now, a ballooning federal budget deficit exceeding most expectations have fuelled upsizing speculation: for one example, JPM's forecast for the full year budget deficit had been $1.48 trillion, but with $1.4 trillion deficit in the first 3 quarters it's now tracking at $1.8 trillion.
- That widening gap means Treasury will have to begin making changes in August. 2s/3s/5s/7s could be upsized $2B per month in the coming quarter (eg 2s going to $48B vs the current $42B), with longer-end tenors seeing more limited changes. BofA sees sizes increasing across the board through the end of the Feb-Apr 2024 quarter; JPM's projections suggest sizes rising until the end of the May-Jul 2024 quarter.
- By comparison: JPM sees nominal coupon sales of $349B in the Aug 2024 refunding month, vs $268B in the most recent refunding month in May 2023.
- This is a shift from split opinions entering May’s refunding over whether bigger coupons would be announced in Aug or in Nov, or even later.
- More details forthcoming in MNI's Refunding preview / US Tsy Issuance Deep Dive published on Tue Aug 1, following the quarterly marketable borrowing estimates out Jul 31. (Our last publication had pencilled in a $2B increase to multiple tenors in August - see table below.)
Source: July MNI Deep Dive
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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