The TBAC Is Suddenly Worried Who Pays For $12 Trillion In US Deficits… And The Dollar’s Reserve Status
Today at 830am the Treasury Borrowing Advisory Committee (aka the TBAC, which many years ago we dubbed the Supercommittee That Really Runs America, an assessment which 8 years later Bloomberg now generally agrees with) “released minutes of its Jan. 29 meeting held at the Hay-Adams Hotel in conjunction with the U.S. government’s quarterly refunding announcement.
First, the highlights from the refunding announcement revealed no surprises, with the Treasury announcing no increase in nominal coupon or FRN auction sizes in the coming quarter, and expects TIPS issuance of $22-27BN this calendar year. Specifically, the Treasury will sell $38BN in 3 Year notes, unchanged from December, $27BN in 10 Year notes, unchanged from last quarter, and $19BN in 30 Year Bonds, also unchanged from last quarter. In total, the Treasury will sell $84BN in long-term debt next week vs $83BN last quarter, in the process raising $29.9BN in new cash.
In this context, the TBAC recommended keeping nominal coupon auction sizes unchanged for the coming quarter, while gradually increasing TIPS by $1b per auction, with the increases starting with the 30Y TIPS in February, 5y TIPS in April and 10y increases to be considered subsequently. Following were dealers recommendations for coupon auction size increases: $1BN in 5y and 10y, $2BN in 30y, noted increases could be gradual and 30y could at first be increased by just $1BN. Primary dealers also suggested increasing TIPS issuance gradually, resulting in $24b increase over rest of CY2019; committee agreed increase should be gradual, with bulk coming from new October 5y security
…click on the above link to read the rest of the article…
