TD analysts Priya Misra, Gennadiy....>

US TSYS/SUPPLY: TD analysts Priya Misra, Gennadiy Goldberg and Cheng Chen said

"as we expected, Tsy announced no changes to issue sizes over the next 3 months

at the August refunding" announcement, "$24bn in 3s, $23bn in 10s and $15bn in

30s" auctions for next week. 

- They added "Tsy did not make any decision" on "tenors and amounts of auction

size increases due to Fed portfolio runoff, deferring the decision to the Nov.

refunding." But Tsy said it will likely respond to "additional borrowing needs

associated with SOMA redemptions by increasing both Tsy bill and Tsy nominal

coupon auction sizes, beginning with bills and then coupons, as appropriate." 

- They added TBAC "recommended the increase in issuance to occur in bills and

nominal coupons, while gradually increasing bills as a share of overall debt.

Funding the entire increase in issuance needs with bills was deemed

inappropriate, given the potential magnitude of the funding gap and the aim to

keep WAM the same or higher going forward. There was a discussion that WAM is

not the single best measure of funding costs and risks, thus mechanically

increasing long term issuance need not be optimal."