Treasury Refunding Announcement
Highlights
A lower fiscal deficit means lower borrowing needs for the government, at least a little lower. The quarterly refunding totals $70 billion, down from $72 billion in the prior quarter. The reduction is in the 2-year note, at $30 billion vs $32 billion. The 10-year and 30-year sizes are the same, at $24 billion and $16 billion.
The Treasury says it has incrementally reduced its annual borrowing capacity by $60 billion through cuts in 2- and 3-year auction sizes. Unlike last quarter when 2- and 3-year auction sizes were inched lower month to month, the Treasury says it will maintain current sizes through the quarter.
Floating rate notes are coming! On January 23 the Treasury will announce details of the first FRN auction, expected to be a 2-year maturity and between $10 and $15 billion in size. The first FRN auction is scheduled for January 29.
The Treasury estimates it will borrow $266 billion in the calendar fourth quarter and pegs its cash balance at $140 billion at the end of December. For the first quarter, the Treasury estimates it will borrow just about as much, $265 billion to end March with a cash balance of $45 billion. Today's refunding will raise $6.5 billion in new cash.
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