Wrightson ICAP: Looking For Clarity On Treasury Cash Limits

Wrightson ICAP writes that while the Treasury provided much more guidance than anticipated in its qtly financing estimates out Monday, they hope to hear more today at the refunding announcement/press conf about the Treasury's interpretation of its debt ceiling constraints going forward.

• Re Monday's announcement: "The Treasury has adopted a more flexible interpretation of its end-of-July cash balance constraints, which will allow it to draw down its cash position more gradually over the next three months than previously feared." This includes a Tsy Jun 30 cash balance assumption of $800bn, w end-July $450bn, and end-Sep at $750bn.

Their expectations for what else to watch in today's refunding announcement:

• Nominal coupons unchanged
• Increases of $1bn in 5-Yr TIPS reopening in June and of 10-Yr in July, but "the Treasury has suggested that it has an open mind about the exact sizes of individual issues" and +$2bn in 10Yr "not out of the question".
• Tsy to "punt on the question of SOFR floaters again this quarter" as the Treasury "will feel that it has enough on its plate for the time being"