HALISTER1: Treasury Likely to Boost Some Auction Sizes in November: SocGen

Treasury Likely to Boost Some Auction Sizes in November: SocGen

(Bloomberg) -- The Treasury is likely to increase 2Y auction by $2b, 10Y and 30Y auctions by $1b starting in November to fund increasing deficits and Fed portfolio runoff, SocGen strategists led by Subadra Rajappa say in Oct. 26 note.
  • Issuance increases are likely to focus on the front end, however it’s possible Treasury will announce “a modest increase in back- end issuance that is not currently anticipated by the market” at the Nov. 1 refunding announcement
  • Rising borrowing needs may eventually lead Treasury to reintroduce 20Y tenor or an ultra- long, however that’s unlikely for November
  • SocGen projects gross issuance of $2.4t and net issuance of $556b in calendar 2018 (not including SOMA add-ons), with any increased long-end issuance likely to pressure term premiums
  • In the meantime, they continue to expect UST 10Y to find “significant support” in the 2.5%-2.6% range
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net To contact the editors responsible for this story: Benjamin Purvis at bpurvis@bloomberg.net Boris Korby

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Subadra Rajappa (Societe Generale SA)

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