Bond traders expect the U.S. Treasury to announce record-setting debt sales at the end of the month, Bloomberg’s Liz McCormick says: “Many strategists at primary-dealer firms predict that the Treasury will increase coupon-bearing debt sales at the quarterly refunding announcement on Oct. 31, likely taking the total amount of 3-, 10- and 30-year securities being offered at sales next week to an unprecedented level.”
The previous record for these so-called “refunding sales” was set in 2009-2010, when the Treasury sold $81 billion worth of such debt in successive quarters as the economy reeled under the effects of the recession.
The conditions this time around are quite different, McCormick notes, with tax cuts and spending hikes creating enormous deficits in a strong economy. “Deficits aren’t going anywhere and Treasury will need to continue to ramp up issuance,” Jon Hill of BMO Capital Markets told Bloomberg.
