The U.S. Department of the Treasury has announced the offering of $125 billion in Treasury securities to refund approximately $111 billion of privately-held Treasury notes maturing on August 15, 2024. This issuance will raise new cash from private investors amounting to roughly $14 billion.
The offered securities include a 3-year note valued at $58 billion, maturing on August 15, 2027; a 10-year note worth $42 billion, maturing on August 15, 2034; and a 30-year bond amounting to $25 billion, maturing on August 15, 2054. The auctions for these securities are scheduled as follows: the 3-year note will be auctioned at 1:00 p.m. ET on Tuesday, August 6, 2024; the 10-year note at the same time on Wednesday, August 7, 2024; and the 30-year bond at the same time on Thursday, August 8, 2024. All auctions will take place on a yield basis and settle on Thursday, August 15, 2024.
Treasury's financing requirements for the quarter will be met through regular weekly bill auctions, cash management bills (CMBs), and monthly auctions of notes, bonds, Treasury Inflation-Protected Securities (TIPS), and Floating Rate Notes (FRNs).
Regarding nominal coupon and FRN financing, "Treasury believes its current auction sizes leave it well positioned to address potential changes to the fiscal outlook and to the pace and duration of future SOMA redemptions." Based on projected borrowing needs, no increase in nominal coupon or FRN auction sizes is anticipated for several quarters.
The table below outlines actual auction sizes for May to July 2024 and anticipated sizes for August to October:
| Month | Size ($ Billion) |
|---------|------------------|
| May-24 | Various |
| Jun-24 | Various |
| Jul-24 | Various |
| Aug-24 | Various |
| Sep-24 | Various |
| Oct-24 | Various |
To address seasonal or unexpected variations in borrowing needs over the next quarter, Treasury plans adjustments in regular bill auction sizes or CMBs.
In terms of TIPS financing strategy due to intermediate- to long-term borrowing outlooks and structural supply-demand balance for TIPS: "Treasury believes it would be prudent to continue with incremental increases to TIPS auction sizes." Plans include maintaining an $8 billion size for the August reopening auction of a 30-year TIPS issue while increasing both September's reopening size by $1 billion to $17 billion and October's new issue size by $1 billion to $24 billion.
For bill issuance given current fiscal forecasts: "Treasury expects to modestly increase the offering size of short-dated bills being auctioned next week," maintaining those sizes through August with expectations of issuing a short-dated CMB around late August. In anticipation of September tax deadlines, modest reductions in short-dated bill auction sizes are expected early-to-mid September followed by increases in all bill auction sizes throughout October based on expected fiscal outflows.
As part of ongoing evaluations: "Treasury will continue with weekly issuance of the six-week CMB" while making operational adjustments needed for its transition into benchmark status. Further implementation details will be provided during upcoming refundings.
Regarding buybacks: "Today," Treasury releases tentative schedules indicating plans for weekly liquidity support buybacks up-to-$4-billion per operation in nominal coupon securities along with two operations each up-to-$2-billion in longer-maturity buckets over this quarter. Additionally planned are two operations each up-to-$500-million within each TIPS bucket starting from August when removing caps-on eligible-securities per operation toward previous guidance maximums-per-quarter across-buckets-for-liquidity-support.
Based upon current projections around mid-September’s tax dates; cash-management-buybacks may temper reductions otherwise occurring simultaneously among billed-auction-sizes during said timeframe further updates anticipated prior-next-refunding-announcement set Wednesday October thirtieth-two-thousand-twenty-four comments suggestions invited via debt.management@treasury.gov
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