The US Treasury Department announced that it would cut coupon issuance on all maturities in the next quarter, and that the biggest adjustments will occur in seven and 20-year notes.
The Treasury said it would cut issuance as current auction sizes would result in excess debt in the interim term. The government had increased sales amounts in 2020 to cover expenses related to the pandemic.
Sales of notes to seven and 20 years will have relatively greater reductions, which, according to the Treasury, is due to the “Treasury’s desire to better balance supply and structural demand in those timeframes”.
“Those maturities increased significantly more than others in response to increased borrowing needs driven by the COVID-19 pandemic.″ Said the authority in a statement.
The Treasury said it expects to reduce the size of the auctions of two-, three- and five-year notes by $ 2 billion for each monthly maturity during the next quarter, while the amounts sold in seven-year paper will be reduced by US $ 3,000 million in the same period.
New and reopened 10-year and 30-year bond auctions will also be reduced by $ 2 billion, while 20-year bond auctions will be reduced by $ 4 billion.
In total, the cuts are expected to reduce emissions by $ 84 billion in the November-January quarter.
The Treasury reported that it will sell $ 56 billion in three-year debt, $ 39 billion in 10-year notes and $ 25 billion in 30-year bonds next week.
The Treasury said Monday that it plans to borrow $ 1.015 trillion in the fourth quarter, more than the August estimate of $ 703 billion.
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