Via my friend Steve Liddy:<\/p>\n
As most expected Treasury signaled signs of increased T-Bill issuance next year, and a reduction in coupon issuance. Today, they told us all coupon issuance will be held steady for the coming quarter. However, they also threw this in: \u201cGiven Treasury\u2019s commitment to increasing bill supply, adjustments in coupon offering sizes may be necessary in order to increase bill issuance sufficiently in 2016. Treasury will provide more guidance in the future.\u201d It seems Treasury is trying to fill the need for short term instruments with Street balance sheet limiting the amount of Repo available to fill the needs for the market. They did point out that Bill issuance is just over 10% of their portfolio, which is a \u2018multi-decade\u2019 low.<\/p>\n We can debate their strategy for hours. I am neither a balance sheet expert or corp finance guru. I did however work at Countrywide Securities and remember the CFO telling us they didn\u2019t need to term out their debt, back in 4\/2007, because the CP markets were so vibrant. Now, I don\u2019t expect the US Government to ever be in a situation where they can\u2019t borrow. I can also see FED\/TSY working together (wait they are independent entities, so scratch that) to flatten the curve and force banks to lend more, rather than buy 10y notes, with their deposits, and ride the steep YC. But, if the economy doesn\u2019t pick up appreciably, the FED has little in the tool box, so there will likely be a need for fiscal stimulus..which means more borrowing..but that is for another day.<\/p>\n Something to pay attention to moving forward. Any reduction in coupon is likely to be a reason to buy swap spreads, which are at, or near, all time tights.<\/span><\/p>\n \u00a0<\/span><\/p>\n Good luck\u2026.<\/p>\n","protected":false},"excerpt":{"rendered":" Via my friend Steve Liddy: As most expected Treasury signaled signs of increased T-Bill issuance next year, and a reduction in coupon issuance. Today, they told us all coupon issuance will be held steady for the coming quarter. However, they also threw this in: \u201cGiven Treasury\u2019s commitment to increasing bill supply, adjustments in coupon offering […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":["post-23554","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9YXi-67U","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=\/wp\/v2\/posts\/23554","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=23554"}],"version-history":[{"count":1,"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=\/wp\/v2\/posts\/23554\/revisions"}],"predecessor-version":[{"id":23555,"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=\/wp\/v2\/posts\/23554\/revisions\/23555"}],"wp:attachment":[{"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=23554"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=23554"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=23554"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}