Since obviously nobody in charge has learned anything at all, and all the old school games will continue until they no longer can, and demand for US paper, already plunging at the international level, disappears (aside from the Fed of course: the Fed will always be a happy last ditch monetizer of one-ply US paper), here is the Treasury's just released schedule for bond issuance for Fiscal Q1 (Oct-Dec 2011), and Q2 (Jan-March 2012), which amounts to $305 billion and $541 billion, respectively, or a total of $846 billion in 6 months, a $141 billion run rate per month. This compares to a total of $628 billion issued over the comparable period a year ago (although granted the Treasury did burn a whopping $225 billion in cash in Q1 of 2010). In other words, the US Treasury is planning on issuing 35% more in the first half of the fiscal year than a year previously, even though this time last year the Fed was monetizing all gross issuance, and even though the European EFSF was not about to ramp up issuance and soak up hundreds of billions of excess fixed income targeted capital. Now we only have some vague, ineffectively sterilized duration transfer operation which is doing nothing to lift belly demand, and merely takes care of the long end (while the Fed's promise to keep rates at zero until 2013 makes all bonds 2 years and less to be off zero effective duration). We doubt this schedule is even remotely sustainable without some imminent form of Large Scale Asset Purchase program being implement (with or without MBS monetization: for a definitive answer on this issue, please call 949-720-6226), and none of that Nominal GDP targeting mumbo jumbo. Unlike Europe, the Fed knows that money talks, and bullshit targeting walks.
From the Treasury:
The U.S. Department of the Treasury today announced its current estimates of net marketable borrowing for the October – December 2011 and the January - March 2012 quarters:
- During the October – December 2011 quarter, Treasury expects to issue $305 billion in net marketable debt, assuming an end-of-December cash balance of $60 billion. This borrowing estimate is $21 billion higher than announced in July 2011. The increase in borrowing relates to lower receipts, higher outlays, and changes in the cash balance assumptions partially offset by higher net issuances of State and Local Government Series securities.
- During the January - March 2012 quarter, Treasury expects to issue $541 billion in net marketable debt, assuming an end-of-March cash balance of $60 billion.
During the July - September 2011 quarter, Treasury issued $286 billion in net marketable debt, and ended the quarter with a cash balance of $58 billion. In July 2011, Treasury estimated $331 billion in net marketable borrowing and assumed an end-of-September cash balance of $110 billion. The decrease in borrowing was related to lower receipts offset by lower outlays and cash balance adjustments that lowered the estimated end-of-quarter cash balance.
And here is the full breakdown. Compare the projected two quarters with the comparable prior period.