US TSYS/SUPPLY
Treasury's quarterly Refunding process begins next Monday Oct 28 with the release of the financing estimates for the current quarter (we refer to this as the November refunding round). Wednesday Oct 30 brings Treasury's announcement of coupon auction sizes, as well as its guidance for future issuance. MNI usually produces a Deep Dive ahead of the Refunding announcement, but in this case Treasury auctions continue through Tuesday - so unusually, for this round, we will publish a smaller preview for financing/coupon sizes, with our Deep Dive covering the Refunding results after their release.
- First, we begin with the coupon auction sizes. MNI does not expect any change in nominal coupon sizes to be announced (though there might be a small $1B uptick in TIPS) for Nov-Dec-Jan. See table below.
- This would be in keeping with sizes since the May-Jun-Jul quarter and the previous quarter's guidance that Based on current projected borrowing needs, "Treasury does not anticipate needing to increase nominal coupon or FRN auction sizes for at least the next several quarters." This outlook is shared by sell-side analysts whose previews we have seen.
- In that case, more important will be whether the guidance itself changes, to indicate potential for higher issuance in coming quarters. That would be considered a surprise, particularly as it would be conveyed less than a week before the Nov 5 elections. Some see a softening in guidance to open up the possibility of future increases, which would come as an unwelcome surprise to markets.
- Broad consensus is that the next upsizing will not come until late 2025 or even early 2026 though of course much will depend on the fiscal path taken in the next administration/Congress.
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