US Treasury increases size of most of its debt auctions

(Reuters) - The U.S. Treasury Department on Wednesday said it plans to "gradually" increase the size of most of its debt auctions in the November 2023 to January 2024 quarter and expects it will need one more additional quarter of increases after this to meet its financing needs.

MARKET REACTION: U.S. Treasury yields fell after the refunding announcement, but have since pared losses. The 10-year yield was last down less than a basis point at 4.871%.

COMMENTS:

STUART COLE, CHIEF MACRO ECONOMIST, EQUITI CAPITAL, LONDON

“The $112 billion it has announced it will sell this quarter will raise some $9 billion in extra cash compared to the last quarter, which I guess is symptomatic of the fact that the US government's fiscal deficit is growing ever larger.”

“I am a little surprised that the Treasury did not want to issue more longer dated stuff, given the growing fiscal deficit and the extra funding security such longer term borrowing provides. My hunch is that the already higher yields we are seeing in the longer dated section of the curve tied its hands a little.”

STEVEN RICCHIUTO, U.S. CHIEF ECONOMIST, MIZUHO SECURITIES USA LLC, NEW YORK

“The Treasury took a little bit of the borrowing out of the longer end and put it into the belly of the curve. There’s a lot of fear into how much additional increases you were going to get. There was discussion that the refunding itself would be substantially larger than we had anticipated. We just don’t see that. They would just have to expand the duration of the debt over time, it’s not like it has to be done ASAP."

"I think the market got ahead of itself in terms of how big and how bad they thought the fancy numbers would be in terms of the actual projected issue sizes and the size for the refunding itself.”

ART HOGAN, CHIEF MARKET STRATEGIST AT B. RILEY WEALTH, NEW YORK

"The Treasury is going to auction 112 billion in debt next week and that starts Tuesday and works its way through the week and along the curve, but that is modestly above expectations coming into this."

"The ongoing supply of treasury issuance likely puts upward pressure on yields and that presents a headwind for equity investors."

(Compiled by the Global Breaking News team)