US Treasury to borrow $243Bn in Q2, higher than January forecast; FOMC to hold Rates

• The U.S. Treasury said on Monday it expects to borrow US$243.0Bn in the second quarter of 2024 (Q2 2024), US$41.0Bn more than the January estimate. This was largely due to lower cash receipts, partially offset by a higher cash balance at the beginning of the quarter.
• The Q2 2024 financing estimate assumes a cash balance of US$750.0Bn at the end of June, the Treasury said in a statement. Attention now turns to Wednesday when the Treasury will detail its borrowing plans and auction sizes of various maturities.
• Treasury officials said on Monday the borrowing estimates assumed no change to the Fed's current US$60.0Bn per month roll-off of Treasuries. It also announced that it expects to borrow US$847.0Bn in Q3 2024, as it projects a cash balance of US$850.0Bn at the end of September.
• With yields near the highest in months, the market has been highly attuned to the supply of Treasuries as concerns mount over rapidly rising U.S. debt.
• The Federal Open Market Committee is expected to keep its benchmark rate unchanged on Wednesday at the end of its two-day meeting. Speculation is growing that the Federal Reserve will not pivot to easing rates until late this year, given the U.S. economic strength and inflation that is stuck above its target rate of 2.0%.
• At the same time, the Fed is expected to taper its quantitative tightening program soon, in which it lets bonds it bought during the pandemic mature without replacing them on its balance sheet. That will affect how much cash the Treasury needs to raise via Treasury bills.

(Source: Reuters)