The refunding: As part of its regular quarterly refunding, the U.S. Treasury announced Wednesday it would sell $96 billion in notes and bonds next week.
The department said it would auction $40 billion in three-year Treasury notes
on Nov. 8, $35 billion in 10-year notes
on Nov. 9 and $21 billion of 30-year bonds
on Nov. 10.
The balance of Treasury’s financing needs over the quarter will be met by regular weekly bill auctions, cash management bills, and monthly auctions of Treasury inflation-protected Securities and 2-year floating rate notes.
Financing needs and issuance plans: Treasury said it believes the current issuance size leave it well positioned to address borrowing needs. Treasury said it was increasing the December 5-year TIPS auction to $19 billion. Total gross issuance of TIPS will have increased $14 billion this year.
Buybacks: The department said it has been talking to bond market participants about the potential uses for buybacks, but said it has made no decision “on whether or how” to implement a program. Analysts said buying back some of the older debt could help boost market liquidity, a source of concern in the current market.
Big picture: Economists said the recent cuts in coupon sizes are over as Treasury financing needs increase with higher interest rates. In addition, the Federal Reserve’s program to shrink its balance sheet pushes up Treasury borrowing.
The Federal deficit is expected to narrow slightly this year. The government ran a deficit of $1.38 trillion in fiscal year 2022, down from $2.77 trillion in the prior year.