What’s new: The Treasury Department on Wednesday laid out its plan to pay for coronavirus relief measures passed by Congress. The department said it has already borrowed $1.46 trillion of the $3 trillion it needs to borrow on net. While the initial increases in financing were focused on Treasury bills, Treasury expects to shift financing to longer-dated securities over the coming quarters.
In the May-July quarter, Treasury said it intends to increase auction sizes for 2-year, 3-year and 5-year note auctions by $2 billion per month. It will increase the auction size of the 7-year note
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by $3 billion per month over the next 3 months. The size of the 7-year note will increase by $9 billion by the end of July. It will increase both new and reopened 10-year note auctions by $5 billion and the 30-year new and reopened 30-year bond auctions by $3 billion.
Treasury also will sell $20 billion of 20-year bonds in the initial auction on May 20. It will reopen the 20-year bond in both June and July in amounts of $17 billion each.
The department also set weekly issuance of cash management bills.
The numbers: As part of its regular quarterly refunding, Treasury announced it would sell $96 billion in notes and bonds next week. This is up from $84 billion in the last quarter.
The department will auction $42 billion in 3-year Treasury notes
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on May 11 and $32 billion in 10-year notes
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on May 12. The government will also sell $22 billion in 30-year bonds
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on May 13.
Big picture: The cost of protecting the economy from the coronavirus pandemic is steep and will bring the federal debt to levels not seen since World War II.
The Fed is easing the burden somewhat, having bought roughly $1.3 trillion of Treasurys since mid-March. The Congressional Budget Office has forecast the federal budget deficit is projected to be $3.7 trillion for fiscal year 2020.
Market reaction: The yield on the 10-year was slightly higher at 0.682% in morning trading.
Source : MTV
