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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
A few areas to watch in today's Treasury Quarterly Refunding Announcement (QRA) which will be available at this linkat 0830ET/1330UK:
- Auction Sizes Unchanged: Aug-Sep-Oct auction sizes are firmly expected to remain unchanged from the prior quarter (though there are some expectations that inflation-linked TIPS sizes could be upped modestly – per Treasury’s May guidance). See table below.
- Guidance For Future Quarters Unchanged...With Risks: A minority of analysts have raised the possibility of Treasury either tweaking or substantially changing its previous issuance guidance ("Treasury does not anticipate needing to increase nominal coupon or FRN auction sizes for at least the next several quarters") in light of large fiscal deficits. That would be seen as a surprising and bearish development for Treasury supply, with most analysts seeing mid-2025 or later as the earliest Treasury will raise auction sizes.
- The TBAC Advisory Committee's minutes to be released today may also shed some light on current thinking about coupon upsizing, as well as on future bill issuance (which is currently running above TBAC's recommended introduction of 15-20% of marketable debt ratio).
- Cash Management Buybacks: The next quarter is likely (though not certain) to see the introduction of cash management buybacks (in addition to the liquidity management operations started last quarter). These would likely start in September to coincide with a key tax date. The maximum size hasn’t been set but would likely to be $30-40B for the quarter. Previous guidance has been that Treasury would purchase short-dated coupon securities (under 2 years maturity). This contrasts with liquidity management purchases which are made across the curve in various buckets.
- For more details, MNI's full Refunding preview is here (PDF).
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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