U.S. Treasury borrowing notes

Today the Treasury Borrowing Advisory Committee released the minutes from their recent meeting. Below are the highlights :

  • Given the cumulative deficit over the next three fiscal years of nearly $3.5 trillion according to OMB, Director Ramanathan stated that Treasury will need to remain extremely agile through its debt management approach and actions to confront challenges related to the fiscal and economic outlook.
  • market participants should expect between $1.5 trillion and $2 trillion in nominal and inflation linked issuance again this year; at the same time, bill issuance may marginally decline while shorter dated coupons stabilize at current levels.
  • By gradually increasing coupons incrementally over the next three years, DAS Rutherford expected the average maturity of the debt to increase back to the historical average of 60 months by fiscal year-end 2010. Eventually, though it could take five to six years, Treasury’s marketable debt portfolio will stabilize at a new level between six to seven years.
  • Treasury’s intention to eliminate the 20-year TIPS and reintroduce the 30-year TIPS.
  • For FY2010, TIPS issuance should be increased from the current run rate of $58 billion per year to an overall issuance amount of between $70 and $80 billion per year across securities. In FY2011, overall TIPS issuance should be further increased to between $100 and $125 billion.

Lots of additional information and analysis are contained within the minutes for those wanting more clarity on what changes are coming to the composition of upcoming Treasury auctions.

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