Tags: treasury | fed | debt | issuance

Has Fed Debt Issuance Peaked?

Friday, 23 Apr 2010 03:16 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
The Treasury, signaling that its debt issuance has likely peaked, on Friday asked its primary bond dealers for advice on how best to reduce coupon sizes as the government's fiscal outlook improves.

The Treasury put the question to dealers in a survey ahead of an April 30 meeting that is part of its quarterly debt refunding effort.

In recent months the Treasury has shifted to longer-dated coupon notes and bonds as government spending to fight the recession has increased and tax revenues have dwindled. But as the economy recovers and budget deficits shrink, that need could abate.

The Treasury is due on May 5 to announce quarterly auctions of 3-year, 10-year and 30-year debt to refund maturing securities.

"Treasury indicated at the February refunding that debt managers are contemplating a reduction in coupons sizes as the fiscal outlook improves," it said in a questionnaire which it asked dealers to fill out before the meeting, adding:

"How should Treasury accomplish such a reduction?"

The survey also asks dealers for their views on increasing the frequency of inflation indexed notes known as Treasury Inflation Protected Securities. It sought their considerations in a plan Treasury is contemplating to add a second auction of reopened 10-year TIPS each quarter, asking:

"What other changes regarding TIPS issuance should Treasury be evaluating?"

In addition, the Treasury asked dealers to discuss how new Securities and Exchange Commission requirements for money market funds might impact the demand for Treasury securities.

The so-called Rule 2a-7 changes were put in place to require money market funds to maintain more liquidity after a key fund "broke the buck" when its net asset value per share fell below $1 at the height of the financial crisis in 2008, triggering a temporary Treasury guarantee program.

Among provisions in the rules are a reduction in weighted average maturity of money market portfolios to 60 days from 90 and a requirement they invest no more than 3 percent of assets in second-tier securities compared to 5 percent previously.

These provisions could lead to more demand for Treasury securities by money market funds as they seek to increase their liquidity and safety.

© 2014 Thomson/Reuters. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Advocates Seek to End Tennessee's Appeal as 'Abortion Destination'

Saturday, 25 Oct 2014 11:20 AM

Anti-abortion advocates are trying to change laws in Tennessee, which they deride as being the abortion destination of . . .

Le Minh Thai, Vietnam war Photographer, Dies in US

Saturday, 25 Oct 2014 09:50 AM

Le Minh Thai, a photojournalist who covered the Vietnam War for The Associated Press and Time Life, has died. He was 93. . . .

Suspect Arrested in Death of 2 California Deputies

Saturday, 25 Oct 2014 09:50 AM

A man armed with an assault rifle shot three sheriff's deputies and a civilian, killing two of the deputies and leading  . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved