After announcing it issued $265 billion in marketable debt to fund $445 billion in financing needs (including the wind down of $195 billion in SFP cash management bills), the Treasury has just announced it expects to need just $142 billion in Treasury issuance in the April-June quarter. This ridiculous amount is more than 50% lower than the previous estimate of $299 billion disclosed on January 31, and confirms that the Treasury is now scrambling to appear prudent to Congress with its debt needs. That it will need far, far more at the end of the day is beyond question. The reason for the over 50% plunge in borrowing needs "largely relates to higher receipts and lower outlays." Well, that's great - perhaps the treasury can explain why its preliminary cash need for the July-Sept quarter are $405 billion (compared to $396 billion a year earlier). Altogether, this advance estimate is ludicrous and shows that Geithner has totally lost a grip on reality. Yet on the other hand, in order to make his point, the market needs to crash (just like the May 6th crash killed any hope of an Audit the Fed bill). Looks like risk is duly noting its duty to act appropriately when record 2011 bonuses are at stake.
The sources and uses sheet is presented below:
And the full text of the Treasury's borowing estimate announcement:
The U.S. Department of the Treasury today announced its current estimates of net marketable borrowing for the April – June 2011 and the July – September 2011 quarters:
- During the April – June 2011 quarter, Treasury expects to issue $142 billion in net marketable debt, assuming an end-of-June cash balance of $95 billion, which includes $5 billion for the Supplementary Financing Program (SFP). This borrowing estimate is $156 billion lower than announced in January 2011. The decrease in borrowing largely relates to higher receipts and lower outlays.
- During the July – September 2011 quarter, Treasury expects to issue $405 billion in net marketable debt, assuming an end-of-September cash balance of $115 billion, which includes $5 billion for the SFP.During the January – March 2011 quarter, Treasury issued $265 billion in net marketable debt, and ended the quarter with a cash balance of $118 billion, of which $5 billion was attributable to the SFP. In January 2011, Treasury estimated $237 billion in net marketable borrowing and assumed an end-of-March cash balance of $65 billion, which included an SFP balance of $5 billion. The higher cash balance resulted primarily from higher receipts and lower outlays.