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U.S. Treasury to sell $112 billion next week, continue shift to longer-dated debt

Published 08/05/2020, 08:50 AM
Updated 08/05/2020, 10:55 AM
© Reuters.

© Reuters.

By Ross Kerber

BOSTON (Reuters) - The U.S. Treasury Department said on Wednesday it will sell $112 billion next week in notes and bonds and that it plans to continue to shift more of its funding to longer-dated debt in coming quarters, as it finances measures to offset the impact of the COVID-19 epidemic.

The Treasury said it expects its debt needs to moderate but remain elevated, after borrowing a staggering $2.753 trillion in the second quarter.

"Treasury continues to face unprecedented borrowing needs as a result of the federal response to COVID-19,” Brian Smith, Treasury's deputy assistant secretary for federal finance, said on a conference call.

The Treasury will sell $48 billion in three-year notes, $38 billion in 10-year notes and $26 billion in 30-year bonds next week as part of its quarterly refunding.

It said on Monday that it plans to borrow $947 billion in the third quarter, about $270 billion more than it previously estimated for the July-September period.

The federal agency will use "long-term issuance as a prudent means of managing its maturity profile and limiting potential future issuance volatility," Smith said in a release.

As Treasury increases auction sizes, it will have larger increases in 7-year, 10-year, 20-year and 30-year notes and bonds, he said.

Treasury has been raising extra money to fund trillions of dollars in coronavirus-related economic aid allocated by Washington. As of Tuesday, White House negotiators were trying to reach a deal with congressional Democrats to extend relief measures including unemployment benefits, liability protections for businesses and a moratorium on evictions.

Borrowing has spiked far above the quarterly record set during the 2008 financial crisis.

A declining economic outlook has driven down U.S Treasury yields across the curve to record or near-record lows, helping raise equity prices and lower borrowing costs.

Latest comments

I'm not sure either way. My old man would argue this type of thing drive interest rates up. Basically, not enough people will buy the bonds increasing interest rates.
it is basically the annual GDP of small EU country....when money is spent like this means it is worthless...
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