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President Donald Trump’s administration will increase the amount of long-term debt it sells to $66 billion this quarter, marking the first boost in borrowing since 2009 as the Treasury seeks to cover mounting budget deficits.
The Treasury is shaping the government’s borrowing plans against a budget shortfall that grew to $665.7 billion last fiscal year because of higher spending on Medicare, Social Security and other programs for an aging population. The gap is expected to widen further due to tax cuts enacted this year that are projected to reduce revenue by almost $1.5 trillion over the next decade.
Treasury Secretary Steven Mnuchin’s department also partly linked the larger sales of debt to the Federal Reserve cutting its crisis-era portfolio of Treasury bonds, which it bought to stimulate the economy following the financial crisis. As the Fed slows the amount of government debt it reinvests, the Treasury has to make it up through public borrowing.
Mnuchin’s debt management team will sell next week $26 billion of 3-year notes versus $24 billion in November, it said Wednesday in its refunding announcement. The department also lifted to $24 billion the sale of 10-year notes from $23 billion and 30-year bonds to $16 billion from $15 billion, also to be auctioned next week. Total offerings rose to $66 billion from $62 billion in November.
The Treasury said it expects to lift sales of 2- and 3-year note auctions by $2 billion per month over the quarter. It will also boost 5-, 7- and 10-year notes and 30-year bond auction by $1 billion each month starting in February. Sale of 2-year floating-rate notes will also be increased by $2 billion beginning next month. Additional borrowing needs will be addressed by increasing bill sales.
The emphasis on boosting two- and three-year maturities is a short-term financing solution and means the Treasury will probably need to keep increasing auction sizes going forward, Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, said in a note.
“This gets issuance up quickly and will fix this year’s problem, but in 2 to 3 years’ time, when the funding gap is projected to be at least as large as it is today, the bulk of the hikes announced today will roll off,” Stanley said. “So, at that point, to increase net issuance, Treasury would have to boost auction sizes yet again.”
The changes will result in an additional $42 billion of new issuance for the upcoming quarter. Auctions sizes of Treasury Inflation Protected Securities will remain unchanged over the three-month period.
‘Borrowing Needs’
https://www.bloomberg.com/amp/news/...s-coupon-debt-sales-for-first-time-since-2009
The Treasury is shaping the government’s borrowing plans against a budget shortfall that grew to $665.7 billion last fiscal year because of higher spending on Medicare, Social Security and other programs for an aging population. The gap is expected to widen further due to tax cuts enacted this year that are projected to reduce revenue by almost $1.5 trillion over the next decade.
Treasury Secretary Steven Mnuchin’s department also partly linked the larger sales of debt to the Federal Reserve cutting its crisis-era portfolio of Treasury bonds, which it bought to stimulate the economy following the financial crisis. As the Fed slows the amount of government debt it reinvests, the Treasury has to make it up through public borrowing.
Mnuchin’s debt management team will sell next week $26 billion of 3-year notes versus $24 billion in November, it said Wednesday in its refunding announcement. The department also lifted to $24 billion the sale of 10-year notes from $23 billion and 30-year bonds to $16 billion from $15 billion, also to be auctioned next week. Total offerings rose to $66 billion from $62 billion in November.
The Treasury said it expects to lift sales of 2- and 3-year note auctions by $2 billion per month over the quarter. It will also boost 5-, 7- and 10-year notes and 30-year bond auction by $1 billion each month starting in February. Sale of 2-year floating-rate notes will also be increased by $2 billion beginning next month. Additional borrowing needs will be addressed by increasing bill sales.
The emphasis on boosting two- and three-year maturities is a short-term financing solution and means the Treasury will probably need to keep increasing auction sizes going forward, Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, said in a note.
“This gets issuance up quickly and will fix this year’s problem, but in 2 to 3 years’ time, when the funding gap is projected to be at least as large as it is today, the bulk of the hikes announced today will roll off,” Stanley said. “So, at that point, to increase net issuance, Treasury would have to boost auction sizes yet again.”
The changes will result in an additional $42 billion of new issuance for the upcoming quarter. Auctions sizes of Treasury Inflation Protected Securities will remain unchanged over the three-month period.
‘Borrowing Needs’
https://www.bloomberg.com/amp/news/...s-coupon-debt-sales-for-first-time-since-2009
No questions asked on borrowing all those rich life style is passed to all smaller countries of world by "Friends" of Banks
