Key Takeaways
- The U.S. Treasury announced a $125 billion quarterly refunding, comprising $58 billion in 3-year notes, $42 billion in 10-year notes, and $25 billion in 30-year bonds, aiming to raise $34.8 billion in new cash.
- The Treasury anticipates trimming short-dated bill auction sizes by late March, which is expected to result in a $250-$300 billion decline in net bill supply by early May, partly due to the April 15 tax date.
- The Treasury General Account (TGA) is projected to peak around $1.025 trillion by late April.
- In geopolitical news, Chinese state media reported a call between President Xi Jinping and Donald Trump, while US-Iran nuclear talks are slated for Friday in Oman.
US Treasury Details $125 Billion Refunding, Forecasts Bill Supply Reduction
The U.S. Treasury today confirmed its quarterly refunding operations will total $125 billion, aligning with market expectations. This refunding package, scheduled through April 2026, is set to generate approximately $34.8 billion in new cash from private investors. The specific offerings include $58 billion in 3-year notes, $42 billion in 10-year notes, and $25 billion in 30-year bonds, with auctions scheduled for next week.
Looking ahead, the Treasury plans to incrementally reduce short-dated bill auction sizes by late March, primarily in anticipation of the April 15 tax date. These adjustments are expected to lead to a cumulative $250 billion to $300 billion net decline in total bill supply by early May. Despite these anticipated cuts, the Treasury intends to maintain the offering sizes of benchmark bills at or near current levels into mid-March.
The Treasury General Account (TGA) is estimated to reach a peak of around $1.025 trillion by late April, before a projected decline in May. The Treasury also stated its intention to keep coupon and floating rate note (FRN) auction sizes unchanged for the next several quarters. However, it continues to evaluate potential future increases for these auction sizes, considering trends in structural demand and potential costs and risks to issuance profiles. Treasury Inflation-Protected Securities (TIPS) auction sizes will also be maintained at current levels.
Geopolitical Developments Feature High-Level Engagements
In a notable geopolitical development, Chinese state media reported a phone call between Chinese President Xi Jinping and Donald Trump. While specific details of their discussion were not immediately released, such high-level contact underscores ongoing diplomatic engagement.
Separately, diplomatic efforts between the United States and Iran are set to continue. Iran's ISNA news agency announced that nuclear talks with the U.S. will be held on Friday in Oman. U.S. envoy Steve Witkoff and Iran's Foreign Minister Abbas Araqchi are expected to participate in these discussions, which are anticipated to follow a format similar to previous rounds.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.