Treasury Refunding: No Changes To Auction Sizes; Bessent Keeps "At Least" In Forward Guidance

The US Treasury released its quarterly refunding announcement, which largely maintained the status quo despite expectations for changes. The Treasury decided to keep the existing guidance on coupon and FRN auction sizes, signaling continued reliance on bill issuance. This decision comes despite warnings about the risks associated with increasing bill issuance. The Treasury's actions suggest a preference for continuing its recent strategy of issuing bills to meet borrowing needs. Bond dealers had been divided on whether the announcement would alter forward guidance on auction sizes. The Treasury will sell $125 billion in refunding debt and maintain coupon sizes for the next quarter. Short-dated bill issuance sizes are expected to increase over the coming weeks, followed by adjustments in June and July. The Treasury plans to maintain current TIPS issuance sizes and modify settlement timing for 20-year bond reopening auctions. The Treasury is also reducing cash management buybacks in shorter-term maturities. The Treasury General Account is expected to peak at $1 trillion in late July. The Treasury Borrowing Advisory Committee (TBAC) recommended maintaining current auction sizes and discussed potential changes to guidance. The TBAC also debated investing excess cash in the overnight Treasury repo market.