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Quarterly Reimbursement Statement from Assistant Secretary for Financial Markets Josh Frost

Quarterly Reimbursement Statement from Assistant Secretary for Financial Markets Josh Frost

 


WASHINGTON The U.S. Treasury Department is offering $125 billion in Treasury securities to repay approximately $116.4 billion in private Treasury notes and bonds maturing on November 15, 2024. This issuance will raise new liquidity from from private investors amounting to approximately $8.6 billion. The titles are:

– A 3-year note in the amount of $58 billion, maturing on November 15, 2027;

– A 10-year note worth $42 billion, maturing on November 15, 2034; And

– A 30-year bond in the amount of $25 billion, maturing on November 15, 2054.

The 3-year note will be auctioned at 1 p.m. ET on Monday, November 4, 2024. The 10-year note will be auctioned at 1 p.m. ET on Tuesday, November 5, 2024. The 30-year bond will be auctioned at 1 p.m. ET on Wednesday, November 6, 2024. All such auctions will be conducted on a yield basis and will be settled on Friday, November 15, 2024.

The balance of the Treasury's financing needs during the quarter will be met through regular weekly auctions of bills, cash management notes (CMB) and monthly notes, bonds, Treasury securities protected against inflation ( TIPS) and 2-year floating rate notes (FRN). auction.

NOMINAL COUPON AND FRN FINANCING

Treasury believes that the current size of its auctions places it in an ideal position to address potential changes in the fiscal outlook as well as the pace and duration of future SOMA repurchases. Based on current projected borrowing needs, Treasury does not anticipate needing to increase the size of nominal coupons or FRN auctions at least over the next few quarters.

The table below shows, in billions of dollars, the actual auction size for the August-October 2024 quarter and the forecast auction size for the November 2024-January 2025 quarter:

2 years

3 years

5 years

7 years

10 years

20 years

30 years

FRN

August 24

69

58

70

44

42

16

25

28

September 24

69

58

70

44

39

13

22

28

October 24

69

58

70

44

39

13

22

30

November 24

69

58

70

44

42

16

25

28

December 24

69

58

70

44

39

13

22

28

January 25

69

58

70

44

39

13

22

30

Treasury plans to respond to any seasonal or unexpected variations in borrowing needs over the next quarter by changing the size of regular bill auctions and/or CMBs.

FINANCING ADVICE

Given the medium- and long-term borrowing outlook and the structural balance between TIPS supply and demand, Treasury believes it would be prudent to continue to gradually increase the size of TIPS auctions in order to maintain a stable share of TIPS as a percentage of the total. outstanding negotiable debt. During the November 2024 to January 2025 quarter, Treasury plans to maintain the size of the November 10-year TIPS reopening auction at $17 billion, increase the size of the 5-year TIPS reopening auction by December by $1 billion to $22 billion and increase the size of the January 10-year TIPS reopening auction. TIPS auction sizes of new issues from $1 billion to $20 billion.

INVOICE ISSUANCE

Given the current budget forecast, Treasury plans to maintain the size of the benchmark bond offering through November and, in late November, plans to issue one or two CMBs to meet its cash management needs at that time. that moment. Given the revenue projections associated with the mid-month corporate tax date, Treasury expects to implement modest reductions in the amount of short-term bill auctions during the month of December. Subsequently, during the month of January 2025, the Treasury plans an increase in the size of bond auctions based on expected budget outflows.

As always, Treasury will continue to evaluate near-term borrowing needs and evaluate, if appropriate, additional adjustments to note auction sizes.

BILLING REFERENCE OVER 6 WEEKS

Treasury will continue the weekly issuance of the 6-week CMB while making the necessary operational and systemic changes to smoothly transition the 6-week CMB to benchmark status. Additional implementation details, including the likely timing of the first benchmark auction, will be provided during the February 2025 redemption.

REDEMPTIONS

Today, the Treasury publishes a provisional redemption schedule for the next redemption quarter. As the schedule indicates, the Treasury plans to conduct weekly liquidity buybacks of up to $4 billion per transaction in nominal coupon securities. In the longer-dated tranches, the Treasury plans to conduct two operations, each of up to $2 billion, during the repayment quarter. The Treasury also plans to conduct two operations, worth up to $500 million each, in each of the TIPS tranches.

Treasury initiated cash management repurchases in September and, as noted in the tentative repurchase schedule, plans to conduct additional cash management repurchases in December 2024. Amounts purchased under cash management repurchases moderate reductions in invoice auction sizes that would otherwise occur over the same period.

Treasury expects that over the next quarter it will purchase up to $30 billion of off-the-shelf securities over multiple tranches for liquidity support and up to $22.5 billion over one tranche. months to two years for cash management purposes.

POSSIBLE SMALL VALUE AUCTION OPERATION

Treasury believes it is prudent to regularly test its contingent auction infrastructure. The Treasury's contingent auction system has been used regularly over the past several years to conduct both simulated auctions and small-value live test auctions. Over the next three months, Treasury intends to conduct low-value test auctions using its contingent auction system. Details of this test will be announced later.

This low-value test auction should not be viewed by market participants as a precursor or signal of any ongoing policy changes to Treasury's existing auction processes.

Please send your comments or suggestions on these or other debt management topics to [email protected].

The next quarterly refund announcement will take place on Wednesday February 5, 2025.

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Sources

1/ https://Google.com/

2/ https://home.treasury.gov/news/press-releases/jy2697

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