The U.S. Treasury Department said on Wednesday it will keep its coupon issuance steady over the coming quarter, but is considering reductions in future quarters.
The Treasury said it will sell $58 billion in three-year notes, $41 billion in 10-year notes, and $27 billion in 30-year bonds next week, unchanged from last quarter. It added that potential cuts in issuance could be announced as soon as the November refunding.
Any shifts in borrowing needs will be met with changes in its issuance of Treasury bills and cash management bills (CMBs), the Treasury said, adding that it expects to end the weekly issuance of six-week CMBs later this month.
Tom Simons, money market economist at Jefferies, called the near-term outlook for financing “murky at best right now,” pointing to uncertainty over the U.S. government’s borrowing capacity under debt ceiling constraints and the impact of infrastructure legislation.
“Given all this, maintaining the status quo was really the most logical move here,” he said in a report.
A two-year suspension of the federal debt limit expired on Saturday, reinstating the cap at the current debt level of around $28.5 trillion. U.S. Treasury Secretary Janet Yellen on Monday said steps were taken to preserve the federal government’s borrowing capacity, including suspending some investments in government employee retirement and health benefits funds.
The Treasury on Wednesday said it could not provide a specific estimate on how long those measures would last.
The Congressional Budget Office has projected the Treasury will exhaust its borrowing authority in October or November as lawmakers battle over a new suspension or increase in the debt cap.
On Monday, the Treasury reduced its third-quarter borrowing estimate to $673 billion, assuming a cash balance of $750 billion on Sept. 30, from the May borrowing estimate of $821 billion.
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