JPM on Treasury Supply

January 30th, 2017 8:53 am | by John Jansen |

Via Bloomberg:

Treasury Coupon Auction Sizes to Grow This Year, JPM Says
2017-01-30 13:31:13.753 GMT

By Elizabeth Stanton
(Bloomberg) — Two factors will cause U.S. financing needs
“to rise significantly” — bigger federal budget deficits,
assuming $250b of fiscal stimulus through end of 2018, and Fed
tapering reinvestments beginning in mid-2018, JPMorgan
strategists led by Jay Barry say in Jan. 27 note.

* “As a result, we expect that Treasury will likely increase
coupon auction sizes later this year,” beginning by
reversing last year’s cuts at the November refunding; 5Y-30Y
sizes would increase by $1b, TIPS by $2b
* Earliest timing for announcement on longer-maturity debt is
probably August
* JPMorgan remains tactically bullish on Treasuries; while
improving economic data and risk appetite “are certainly
bearish,” there is “downside risk around fiscal and trade
policies, and positions remain stretched to the short side”

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