Tags: treasury auctions of notes | bonds | tips | covid spending | monetary policy

Treasury to Cut Auction Sizes for Coming Quarter

Treasury to Cut Auction Sizes for Coming Quarter
United States Department of the Treasury, Washington, D.C. (AP)

Wednesday, 03 August 2022 11:01 AM EDT

The U.S. Treasury Department said on Wednesday it would cut its coupon issuance across all maturities of notes and bonds in the coming quarter, with the largest cuts coming in the 20-year maturity.

The Treasury said it is cutting issuance as it continues to receive information about expected borrowing needs, including an additional quarter of tax receipts and clarity on the timing and pace of redemptions of Treasuries from the Federal Reserve System Open Market Account.

It has been cutting auction sizes after ramping up supply in 2020 to pay for COVID-19 related spending.

The Treasury said it expects to cut the size of 2-, 3-, 5- and 7-year note auctions by $1 billion each per month over the coming quarter, for a total decline of $3 billion each by the end of October.

New and reopened 10-year note and 30-year bond auctions will also be reduced by $1 billion while the 20-year bond auctions will be cut by $2 billion, starting in August.

Josh Frost, assistant secretary for financial markets at the Treasury, said that when 20-year bonds were introduced a little more than two years ago the size of the auctions were larger than the market had initially expected.

Now, “we’ve gotten some feedback that the supply/demand balance...could be improved by making some reductions to the size of the 20-year auctions.”

The Treasury also said it expects to increase the size of its September auction of 10-year Treasury Inflation-Protected Securities (TIPS) by $1 billion to $15 billion and increase its October five-year TIPS auction by $1 billion to $21 billion.

Next week, the Treasury will sell $42 billion in three-year notes, $35 billion in 10-year notes and $21 billion in 30-year bonds.

The Treasury also said it would increase the number of outstanding Treasury bills, noting that the supply of bills outstanding in mid-July was likely the bottom for the year. Since this time, the government has increased bills outstanding by $77 billion and expects to increase it by another nearly $100 billion by quarter-end.

The Treasury said on Monday it expects to borrow $444 billion in the third quarter, more than the May estimate of a $182 billion.

© 2025 Thomson/Reuters. All rights reserved.


StreetTalk
The U.S. Treasury Department said on Wednesday it would cut its coupon issuance across all maturities of notes and bonds in the coming quarter, with the largest cuts coming in the 20-year maturity.
treasury auctions of notes, bonds, tips, covid spending, monetary policy
361
2022-01-03
Wednesday, 03 August 2022 11:01 AM
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