SMRA's Nancy Vanden Houten adds......>

US TSYS/SUPPLY: SMRA's Nancy Vanden Houten adds the US Treasury's "borrowing

needs are increasing because the Fed is allowing some of its holdings to mature

and because deficits are projected to increase. At its press briefing this

morning, Treasury officials said no decision has been made as to how the

increases will be allocated across the curve."

- But she adds that "minutes of Treasury's meeting with its Treasury Borrowing

Advisory Committee said that TBAC thought that 1/4 to 1/3 of increased issuance

needs should be met with bill auctions. Also, the TBAC members agreed that

increases in coupon auctions should focus on the 2- through 5-year sector. The

TBAC favored a financing strategy that maintains the current weighted average

maturity of the debt around current levels, rather than pursuing a financing

strategy that would result in further increases in WAM."