SCHR - U.S. Treasury cuts quarterly borrowing estimate but it's still a record amount

2023-10-31 06:04:13 ET

The U.S. Treasury lowered its federal borrowing estimate for the current quarter on higher revenue expectations, potentially offering reprieve amid fiscal deficit concerns. However, this would still be a record amount of borrowing compared to prior fourth quarters.

The Treasury expects to borrow $776B during October-December, $76B lower than the amount it forecast in July. The new estimate assumes a December-end cash balance of $750B, same as its prior outlook.

The higher revenue projection is due to tax payments expected from California and other states, which had been deferred due to natural disasters, Reuters quoted a Treasury official saying.

Meanwhile, the Treasury expects to borrow $816B during January-March 2024 - also a record for that period - assuming a March-end cash balance of $750B.

During the third calendar quarter of 2023, the Treasury borrowed $1.01T and ended the period with a cash balance of $657B. This marked the largest net debt issuance during a third quarter.

The government closed out its fiscal year in September with a deficit of nearly $1.70T , swelling 23.2% Y/Y.

Investor focus will now turn to the Treasury's quarterly refunding statement due Wednesday. "If Treasury auctions size are larger than expected, budget deficit concerns will grow, which could lead to continued tepid demand during future Treasury auctions," said OANDA analyst Edward Moya.

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More on U.S. economy

• Move over Federal Reserve. Investors eye refunding at Treasury
• Marketable U.S. Treasury Debt To Explode By $2.85T
• Weaker Economic Data Would Help/Treasury Refunding Announcement
• U.S. economy revs up in Q3 with 4.9% annualized growth

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