© Reuters. SUBMIT PHOTO: A bronze seal for the Department of the Treasury is revealed at the U.S. Treasury structure in Washington, U.S., January 20, 2023. REUTERS/Kevin Lamarque/File Photo
(Reuters) -The U.S. Treasury Department on Wednesday stated it prepares to “slowly” increase the size of the majority of its financial obligation auctions in the November 2023 to January 2024 quarter and anticipates it will require another extra quarter of boosts after this to satisfy its funding requires.
MARKET REACTION: U.S. Treasury yields fell after the reimbursing statement. The 10-year yield was just recently around 4.864%.
STEVEN ZENG, United States RATES STRATEGIST, DEUTSCHE BANK, NEW YORK
“We believed the Treasury would slow the rate of boosts to the 10-year, 20-year and 30-year, which’s what they provided. The long-end rallied after reimbursing statement … which follows smaller sized boosts than the marketplace anticipated.”
“Most dealerships anticipated a repeat of the boost from August, the Treasury provided somewhat less … and the marketplace rallied a little on the back of that. Absolutely not a repeat of the panic after the August statement.”
BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN
“It wasn’t as bad as feared. The assistance that there might be just one more quarter where it increases was rather soothing. Leave it to the Treasury to not re-finance when yields were traditionally low and rather extend period when yields are uncommonly high. The Treasury is an awful trader.”
BRUCE CLARK, MACRO STRATEGIST, INFORMA GLOBAL MARKETS, NEW YORK
The Fed has actually decreased its bond issuance in the long-end of the curve compared to August in an effort to soothe the panic in bond markets. They lit a fire in the bond markets in August with the last refunding statement and now they are trying to put it out.
STUART COLE, CHIEF MACRO ECONOMIST, EQUITI CAPITAL, LONDON
“The $112 billion it has actually revealed it will offer this quarter will raise some $9 billion in additional money compared to the last quarter, which I think is symptomatic of the truth that the United States federal government’s financial deficit is growing ever bigger.”
“I am a little shocked that the Treasury did not wish to release more longer outdated things, provided the growing financial deficit and the additional financing security such longer term loaning offers. My inkling is that the currently greater yields we are seeing in the longer outdated area of the curve connected its hands a little.”
STEVEN RICCHIUTO, U.S. CHIEF ECONOMIST, MIZUHO SECURITIES USA LLC, NEW YORK
“The Treasury took a bit of the loaning out of the longer end and put it into the stubborn belly of the curve. There’s a great deal of worry into just how much extra boosts you were going to get. There was conversation that the reimbursing itself would be significantly bigger than we had actually expected. We simply do not see that. They would simply need to broaden the period of the financial obligation in time, it’s not like it needs to be done ASAP.”
“I believe the marketplace got ahead of itself in regards to how huge and how bad they believed the expensive numbers would remain in regards to the real predicted concern sizes and the size for the reimbursing itself.”
ART HOGAN, CHIEF MARKET STRATEGIST AT B. RILEY WEALTH, NEW YORK
“The Treasury is going to auction 112 billion in financial obligation next week which begins Tuesday and works its method through the week and along the curve, however that is decently above expectations entering this.”
“The continuous supply of treasury issuance most likely puts up pressure on yields which provides a headwind for equity financiers.”