The Treasury Department of USA said on Wednesday (3) that it will cut its issuance of coupons in the next three months, with the biggest cuts occurring in maturities of seven and 20 years.
The Treasury said it is cutting issuance because current auction sizes would result in over-borrowing over the medium term. The US government increased the size of auctions in 2020 to pay for expenses related to the Covid-19.
The auctions of Treasuries seven and 20 years will have relatively larger reductions, and the Treasury said that this is due to the “Treasury’s desire to better balance structural supply and demand over these maturities.”
“These maturities have increased significantly more than others in response to increased loan needs driven by the Covid-19 pandemic. The reduction of supply in these terms has also been a focus of feedback from a variety of market participants,” the Treasury said in a statement.
The Treasury said it expects to reduce the size of two-, three-, and five-year bond auctions by $2 billion each a month over the next three months, while seven-year auctions will be reduced by $3 billion a month in same period.
The 20-year auctions will be cut by $4 billion.
Reference: CNN Brasil
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
