No Surprises In Treasury Refunding Statement: No Auction Size Increases For "Next Several Quarters"

The US Treasury announced its quarterly refunding, sticking to its expected plan of unchanged auction sizes for nominal notes and floating-rate notes in the coming quarters. Refunding will total $125 billion, with specific amounts for 3-year, 10-year, and 30-year securities. The Treasury will maintain benchmark bill offering sizes at current levels into mid-March. By late March, short-dated bill auction sizes will be incrementally reduced, aiming for a $250-300 billion net decline in bill supply by early May. The Treasury estimates a cash balance of $850 billion at the end of March. The Treasury General Account (TGA) may peak around $1,025 billion by late April. The Treasury intends to purchase up to $38 billion in off-the-run securities and up to $75 billion in the 1-2 year bucket. The Federal Reserve's bill purchases were also mentioned, recognizing their impact on the market. The Treasury is also evaluating adjustments to its issuance mix. A Treasury Borrowing Advisory Committee (TBAC) meeting discussed SOFR-indexed FRNs and demand trends. TBAC emphasized the importance of regular and predictable operations for market participants. The meeting also discussed the current demand function for treasury securities. The committee also discussed the composition of privately held and total Treasury debt outstanding.