Treasury Sets $125 Billion Refunding, Holds Note and Bond Auction Sizes

The Treasury Department will auction $125 billion of notes and bonds next week, refunding about $97 billion of privately held debt that matures on Nov. 15 and raising roughly $28 billion in new cash, according to its quarterly refunding statement released Wednesday.

• 3-year note: $58 billion, auction Monday, Nov. 9
• 10-year note: $42 billion, auction Tuesday, Nov. 10
• 30-year bond: $25 billion, auction Thursday, Nov. 12

All three sales take place at 1 p.m. Eastern time and settle on Monday, Nov. 16, the department said. Bloomberg News reported that the combined total matches the previous refunding.

Sizes held for November through January

Treasury left monthly auction sizes for its fixed-rate notes and bonds and its floating-rate notes unchanged from the August-to-October quarter. Two-year notes stay at $69 billion, five-year notes at $70 billion and seven-year notes at $44 billion. Inflation-protected securities also hold steady, including a $19 billion reopening of the 10-year TIPS in November.

“Based on current projected borrowing needs, Treasury anticipates maintaining nominal coupon and FRN auction sizes for the next several quarters,” the statement said. Yonhap Infomax noted that the department dropped the words “at least” from that guidance, which had appeared in its previous statement.

Change to the seven-year note

Treasury plans to move the seven-year note from a new issue every month to one new issue each quarter followed by two reopenings, the same pattern used for the 10-year note, according to MarketScreener and Yonhap Infomax. Yonhap reported that the new structure starts with the March 2027 issue.

Hunter McMaster, the assistant secretary for financial markets, said the department continues to evaluate future changes to auction sizes, “with a focus on trends in structural demand and potential costs and risks of various issuance profiles.” Any seasonal swings in borrowing will be handled through regular bill auctions and cash management bills, the statement said. The department expects to cut some shorter-dated bill sizes in December and raise bill auction sizes in January.

Sources: U.S. Department of the Treasury, Bloomberg News, Yonhap Infomax, MarketScreener.