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Treasury Hopes To Issue $72 Billion In New 3,10, 30 Year Bonds Next Week, Even As Capacity Now Just $30 Billion
Next week will be interesting. Even as the Treasury is scrambling to find debt ceiling expansion options (for a complete analysis see this post from January) it has just released its most recent refunding statement, according to which it hopes to issue $72 billion in 3 Year, 10 Year and 30 Year bonds. What is interesting is that completely contrary to expectations, and to recent Treasury announcements, while the UST was expected to issue $69 billion this time around, it actually increased each issue by $1 billion. So much for that promise that the Treasury will need to borrow less. But what is worse is that there are no maturities or refunds next week, meaning the net debt increase next week will be $72 billion. This simply means that Geithner will now have to really start cutting back on all other interagency issues, and to actually start taking away from the funding of the SSTF. And the kicker: Congress is nowhere even close to start thinking about hiking the debt ceiling. While we had been expecting this to be a non-issue, it may suddenly become quite an issue, as unexpected downstream effects from the debt ceiling mitigation exercise start affecting local governments. Bottom line: the US economy now has just $30 billion in incremental debt capacity. And money, being fungible, means that this is it for GDP growth at least until Congress gives the green light on the debt target increase.
And Goldman's take:
Bottom line: This morning’s quarterly refunding statement was in line with expectations as offerings of 3-, 10-, and 30-year securities remained unchanged relative to February levels and Treasury indicated that coupon issuance would remain steady as well. In light of an unexpectedly small borrowing estimate for Q2 announced Monday, we anticipate a reduction in bill issuance toward the end of the quarter with a return to current levels of issuance over the third quarter.
MAIN POINTS:
1. In recent quarters the Treasury Department has had the objective of maintaining a transparent and predictable pattern of coupon issuance. This morning’s announcement is thoroughly in line with that objective, both in keeping the issuance of notes and bonds consistent with the sizes of previous auctions and in repeating that it expects issuance of nominal coupons to remain unchanged over the coming quarter. Thus, in the absence of significant surprises or constraints concerning the budget balance or Treasury’s financing options, the most reasonable expectation for any given coupon auction other than for TIPS is that it will be the same as the last one. Although Treasury did not mention TIPS in this morning’s statement, we expect the sizes of these auctions to increase modestly.
2. However, we were surprised at the small amount of total marketable borrowing that the Treasury anticipated in the current calendar quarter—“only “ $142bn. With an unchanged pace of coupon sales, this implies additional cutbacks in sales of regular Treasury bills in coming weeks. Although we don’t have a great deal of confidence in these estimates, a reasonable scenario would have 13- and 26-week bill sales come down another $3bn per week from the latest levels (to $26bn and $24bn, respectively) and sales of 4-week bills come down to about $15bn by quarter-end. Given the much larger $405bn financing estimate for the third quarter, we would expect bill issuance to pick back up roughly to current levels.
3. With respect to the debt ceiling, the Treasury has also indicated—and repeated this morning—that it expects to be able to fund itself via extraordinary measures through August 2, the day before the next refunding announcement. If this estimate proves to be correct, then we have reasonable confidence that auctions of securities will not be affected significantly.
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Should be fun(gible).
The debt ceiling only matters in the mind of bigot, law-obsessed, constitution-obsessed doomers.
Actually, it is only words written on paper ; and the world is ruled by men, not words.
Solvency, solvency ho!!
To the moon, baby.
anything that has been raised every time it's become inconvenient isn't really a ceiling, it's more like a new year's resolution...sounds good but nobody follows through
much better than the Texas troll with the Jesus act.
Well the first day texas gunslinger was funny.
Rule of showbiz.....always leave your audience wanting more.
Dude, have some pride. I know they pay you by the word to troll these waters but that comment is about as lame as a term paper put together in twenty minutes after an all night kegger. You're going to lose your job if you don't get some quality control!
I'm going to enjoy watching your country burn as idiots like you continue to promulgate nonsense like this. Ah but yes, to want to abide by laws is "bigotted". Newest loony-liberal/faux-conservative trend I see. If only we were all so liberal-minded as to realise such things as debt ceilings are merely shackles of the mind meant to stop us from spending our way into prosperity, even as resources are further depleted, creditors become more nervous and less willing to deal with the US and its credibility sinks even further.
Enjoy your Fourth Reich. You've earned it.
Ignoring Hamy's first line, his second sentence is correct. Predicting that the debt ceiling will be an issue is based on the assumption that the rule of law will stop our glorious leaders. My prediction - they will find a way to keep issuing/monetizing debt whether or not the debt ceiling is raised in time.
BTFD!
This is the dip!!!
If they can wait 12 months I will buy the entire US debt with a 1oz gold coin, and even tip them another. :)
Hammy is joking, but in jest truths rest.
Hammy is right. The debt ceiling will be hiked in secrecy, and the US will be on their way to $20 trillion by 2013.
amazing how the "debate" suddenly got postponed.
Not to worry - Timmah will just bone up on his "Gazzindahs" - and with an eraser here and add a few zeros there -- we actually are running a surplus. Government Math for the apathetic masses
You are only considered unemployed on the day you actually look for a job. Inflation? We only track Ipad prices not food,fuel rent clothing or those other boresome numbers. Debt? Is a Quadrillion a Lot? That depends on what your definition of is, is.
Why not run the debt up to a gazillion dollars.
We can always pay itt off with our collateral gold reserves at 40.00 per ounce.
I'd certainly buy treasuries if they paid back in gold at $40 per oz, but how many are out there anxious to buy so much long term US debt right now. This will be interesting to see how the auctions go. It's like watching the canary as you walk into the mine.
Seriously, if we have to give money to the IMF to bailout Portugal, where does that come from?
I think it comes from gypsy tears but i could have that confused with something else...
The FOMC. The line from the 20's was "they play pool with the planets."
Bottom line: the US economy now has just $30 billion in incremental debt capacity. And money, being fungible, means that this is it for GDP growth at least until Congress gives the green light on the debt target increase.
No, the US government now has just $30b in incremental debt capacity.
And if GDP growth is totally dependant on how much new debt the government can pile on then we're already screwed.
Well then you're really screwed. Take the deficit to 0 and you'll see the GDP go kaput.
I'm not holding my breath on that one...
absolutely. "whose we?" i look at Europe "trying to take the deficit to zero" via an uber currency or Japan which is taking QE to a whole new mind bending level to do the same thing..."to achieve the same chimera called growth." Where are those fat tails anyways? "Covered with silver?"
Great point. Yes the black market is doing just fine, but none of those transactions are part of the GDP nor are they taxed.
Just checking on a map, Pakistan borders China. If they lob a few missiles into Islamabad the patriotic thing to do would be raise the debt limit!
Can Timmy issues IOUs. You know, IOU an a FRN IOU
Can Timmy issues IOUs. You know, IOU an a FRN IOU...?
Actually, timmy's bills are tribute paying issues. The solution is to print his tribute paying junk to the ceiling, then flip over and start issuing US dollars to circulate in lieu of benny bucks to be used as legal tender.
There. No need to raise the ceiling and as more "US" dollars fill the urinal, benny's waste is expelled. All previous debt is paid back in benny's now rapidly deteriorating, er, "deflating" ciphrage.
The tea party is too smart to be tricked this time.
Obama and timmah lied to everyone about when the debt ceiling would be breached. They may still be lying.
This way they have room to manuver if the tea party presents a last minute bill as an ultimatum. Obama can veto it, make noises of armageddon, play chicken with the tea party, all the while secretly knowing that the official deadline was a fake, in case the tea party calls his bluff.
"The tea party is too smart to be tricked this time"
Failed on your first line - because any 'party' which considers Palin or Bachmann to be a representative is not a clever party - and can easily be fooled simply by shouting loudly "he wants to put up taxes...more taxes are BAAAAAD....less taxes are GOOOOOOOD.....me go sleep now"
Extremism in the defense of low taxes (and shrunken government) is no vice.
If this is the only party willing to take an axe to government spending then I'm with stupid.
Hehe. We got a junker lurking.
Come on out. This is fight club!
Although I'm not the one that junked you, I have to agree that your first line sank your battleship.
The Tea Party doesn't have the clout or the numbers to stop an increase and all the shouting is just more political theater. They will either "vote their beliefs" by saying no, or will be "persuaded towards the greater good" and just give a token "no" by the TP "leaders" to show that they are still fiscally conservative.
Either way, it still goes up, the only question is by how much. You add this broken record to the end of QE2 and you have some major "hardship" for the government funded masses who will scream about their cable being cut off.
I say they raise it by 1.5 trillion, get it close to the next national election for politcial points
The tea party's leader can see Russia from her home, I don't think she is that hard to trick.
Must.Not.Feed.Trolls...
Tina Fey is the tea party's leader?
Is it just me, or is there a complete disconnect between the words and actions of the US Government and reality? They are behaving exactly like a person who has lost their job and has no income but continues to eat out every night, run a nice car and generally live it up as though nothing has happened.
This behaviour might be understandable in an individual on the basis that they are simply in denial, but can a large and supposedly intelligent and objective staff of professionals such as those running the Treasury be collectively in denial? It would appear so.
The whole thing reminds be of when Saddam Hussein's spokesman was on TV during the 2nd Gulf War claiming that the American forces were beaten back and the Iraqis were winning while US tanks were clearly visible rolling by in the background of the camera shot.
Hey Timmay - We can see the tanks (Debt).
And not to mention the FED bought 78.5% of the bonds at the last auction...
72 billion a week? Like the cheap prostitutes we are, we prefer to refer to it in an hourly rate.
boogerbutt boogerbutt...oh boooger..boogerbutt.. boogerbutt
Now the rubber meets the road. I see Hammy does not care about the law. Typical for a troll really.
Hamy is a fake troll.
Kinda like plastic rice, but usually funnier. Must be having a hard time coming up with new material!
He used it all last week with Texas Gunslinger.
If only SEAL Team 6 knew the location of Geithner's compound...
Well if the army were doing their actual job description... you know, protecting the country from enemies, foreign and domestic, Timmy, Bernanke, Paulson, Bush, Rumsfeld, Cheney, Obama, Hillary and many others would have been ``Bin Ladened`` long ago.
They will just find a way to do what they want.
If anybody had any doubt who really runs this country (and our democracy is a farce) then this type of behavior should set it straight for the doubters. The Federal Reserve system runs this country and you can believe it by watching how they shall not be stymied by the people's representatives in congress.
And the charade continues.
Where do I go to pick up my circus ticket?
Come on, that is easy. Zerohedge of course. No one else is even paying attention, much less issuing tickets.
Thats right, no one in america is paying attention to anything except Snookies chunky ass....the Bin Laden story is already long forgotten, and the idea the avg american dumbass couch potato is sitting around looking at gubment data all day is ridiculous its all just spinning wheels.
Let's play pretend there's rules.
They can just declare Social Security and Medicare not debt like with fannie and freddie (which would of already put us over, but thats not 'debt' remebember).
Obama will Flip the chart around on national television and declare "Look at this surplus you guys we have generated. We are working hard for americans"
Who cares what Obama does, the avg american idiots attention span is now an hour max, trained by reality TV.
Does this trigger CDS ?
Only if the parties which are asking for debt ceilig raise are NOT CONTROLLING complete CDS business
They can just declare Social Security and Medicare not debt like with fannie and freddie (which would of already put us over, but thats not 'debt' remebember).Obama will Flip the chart around on national television and declare "Look at this surplus you guys we have generated. We are working hard for americans"
Fannie and freddie are technically not debt like treasury bonds.
They have asset backed debt unlike " full faith and credit" treasury debt backed only by hope and change.
If I recall correctly, a number of people have come out saying that the "debt" of F&F should be on the government books as debt. However our government can't put it on the books because it would immediately breach the debt ceiling (there's that word again) that they are already trying to "raise".
I believe it would add about 5 Trillion dollars to the debt, which of course is the last thing that anyone in congress, including the Tea Party, wants to hear about.
Of course, didn't the government completely take over and accept the debt and responsibilities of F&F? Then the debt should go on the government books.
ironically Enron executives got indicted for their off balance sheet SPVs.
Fannie and Freddie are securitizing SPVs, off the balance sheet of the Treasury.
Yes yes, they're GSE's not an arm of the government etc... u know.. like AIG is a public company (only 92% owned by the Treasury).
as unexpected downstream effects from the debt ceiling mitigation exercise start affecting local governments.
Ahhh, to make these petty tryants actually have to live within their own means for a week or two.
EUR/USD 1.491
DX-Y 72.76
Time to buy some Plata.
just like printing more birth certificates. print more gold and silver. this stuff is easy.
Americans are such a whiners, in Belgium I am paying 6,25 euro per gallon or 9,25 US$ per gallon
wait till you start paying these prices!!!!
They have cars in Belgium? No one on this thread has mentioned gas prices.
Buy a Scooter, it's more fun.
Save once, and once only.
We love to whine.
It is our birthright
What's Belgium famous for? Chocolates and child abuse, and they only invented the chocolates to get to the kids.
But, I bet the people in Belgium don't have to drive to work 6-7 days a week!
Well Im sure the FED does hope to get a fresh new $72 billion next week...who wouldnt? Should be great for the 'strong dollar' which is presently in a drunken heap out in the alley at 72.7.
It does at times seem truly mindboggling the sheer magnitude of misinformation given by governments. Things like job creation and budget projections get great big headlines when they are first released and then the corrections and real numbers are never reported so people are left thinking the initial numbers are still true.
I can't speak on too high of a horse though, having just "woken up" a few months ago (still young and foolish at times) and it's been a painful process losing faith in government and "the system" but for the best I suppose. But sometimes I think it would be good to go back and take the blue pill, go buy an ipod and read the latest celeb magazine, enjoy my bread and circus. But atleast now I wont wake up one day and scream "OMGWTF EVERYTHING IS GONE!", atleast now I can see it coming and be relatively prepared. It all still sucks but I can certainly understand the "sheeple", when everything you have been taught to trust and believe in is telling you something, it's near impossible to think you might be getting fed a load of crap! Shame the education system was designed around Prussian principles and not Hellenic ideals.
Oh well! As said, Obama will give a moving, inspiring speech and the people will demand the debt ceiling be raised. The dog and pony show will go on for another year or so and if things get REAL shaky then "someone" will wage war on the US people and they can all be unified, once again, against the REAL badguys. Screw fixing the system, that takes time and hardship!
++ TH
I just "woke up" a few months ago too. First post.. Whom I fighting? :)
What bugs me most is looking around at our peers and realizing how ignorant and truly fucked they are. Though I did almost shit my pants Sunday night when the president had an announcement to make: "subject not released."
the dire straits lie strait ahead full sails me boys full sails..tie ben to the mast and plug his ears from the siren of moody song, of fail fail the bonds fail...The FRN will wash up on the stony shore broken..and congress will wail, wall st will wail, gnashing of teeth.
Something big is gonna unhinge here pretty soon. Just like last time. All was verified 'well' until 1 morning everyone saw futures down 500, then everyone was 'totaly caught by surprise'. Yea right, well its comin.
May the 4th be with you!
in the last two weeks, $80 bn in the infamous bank reserves at the FED was transferred to the Treasury's checking account at the FED. With reserves still north of $1.4 trillion there is a lot of potential pumping of the Treasury's checking account available to tide things over.
Wow, it is amazing people forget the debt ceiling is a new invention. Retarded invention that completely misses the point. (why are we borrowing for the fraud and issuing debt upon fraud???). There was no debt ceiling prior to Clinton/Bush timeframe (forget exactly when). But then again we didn't have free trade for the first 200 years or so of our country either, now it's misunderstood as well.
Also it's funny that America needs to borrow from anyone...it's called credit utterance, not bankster debt. But we have bankster debt instead of credit utterance.
Who fucking cares about a fictitious debt ceiling? It was a lame idea anyways. Besides it's fraud and the debt can be cancelled. If it isn't cancelled, it can be defaulted on. Although a legal cancelling or wiping is much more appropriate than default.
That said, since we made up this retarded rule, which gets people to talk about sophistry instead of the real point, this retarded rule actually hurts america....because the #1 focus on the debt shoult be....is this debt legitimate?
Glass-Steagall....that's the standard. Fuck the debt ceiling. It's all about Glass-Steagall.