Latest news with #U.S. Treasury
Reuters
a day ago
- Business
- Reuters
No Treasury auction size increases seen at US refunding
NEW YORK, July 28 (Reuters) - The U.S. Treasury is widely expected to maintain current auction sizes for notes and bonds when it announces financing plans this week, and will likely keep them steady for some time, forgoing issuing longer-dated debt to cover the government's fiscal shortfall. Investors will be looking for guidance as to how long the Treasury can hold off not raising the size of the debt auctions used to fund the ballooning U.S. budget deficit. The fiscal deficit is set to increase to a record $2.8 trillion over a decade with the passage of President Donald Trump's "One Big Beautiful Bill," estimates from the Congressional Budget Office showed. The Treasury will release its quarterly borrowing requirements on Monday at 3:00 p.m. ET (2000 GMT) and its refunding plan on Wednesday at 8:30 a.m. ET (1330 GMT). It will also announce auction sizes for new issues of three-year and 10-year notes, as well as 30-year bonds, securities that make scheduled coupon payments to lenders who buy them. Analysts said the Treasury can afford to delay increasing the auction sizes for longer-maturity debt given its focus on the issuance of more Treasury bills where demand has been robust. Treasury recently ramped up issuance of short-dated bills to replenish its cash balance which has shrunk to about $300 billion. It raised the issuance of the bills with maturities under eight weeks, specifically after Trump's spending bill was signed into law. The tax and spending legislation extended the debt ceiling as well by $5 trillion to more than $40 trillion. Bank estimates of additional T-bill supply by the end of the year ranged from $620 billion to more than $800 billion. Analysts said money market funds are well placed to take on the flood of short-term debt issuance in the market. Money market funds, with more than $7 trillion in assets, have been the biggest buyers of T-bills and will continue to be so, with historical third-quarter inflows averaging around $90 billion between 2015 and 2025, excluding 2020 and 2023, according to J.P. Morgan in a research note. The U.S. bank believes money market funds are likely to absorb about 60%-80% of the upcoming T-bill supply in the next few months. "We think the Treasury has the option of not increasing coupons through quite possibly through 2028," said Guneet Dhingra, head of U.S. rates strategy at BNP Paribas, in New York, referring to securities that make coupon payments such as Treasury notes and bonds. "Incremental needs by the Treasury will be financed via will stay stable and will still raise money for the Treasury. But using T-bills is a sustainable and prudent strategy because demand is significant." The move away from the long end has also been partly driven by market considerations, with the Federal Reserve keeping the fed funds rate at a target range of 4.25%–4.50% since December 2024 due to inflation concerns. That has prompted investors to move away from the long end of the curve, keeping their yields higher. By issuing more short-term debt, like T-bills, the Treasury can borrow at lower rates, reducing immediate interest expenses. Treasury Secretary Scott Bessent earlier said increasing long-term bond sales at current high rates was not cost-effective. Wells Fargo, in a research note, said it doesn't expect the Treasury to begin increasing the size of long-dated auctions until February 2027. TD Securities also thinks auction sizes will remain steady until at least late-2026, noting that the bulk of those increases will likely occur on the front end and the belly or the intermediate part of the curve. Tom Simons, chief U.S. economist at Jefferies in New York, also pointed out that given the still uncertain U.S. fiscal outlook, it would be sensible for the Treasury to stay put for now. In the near term, he believes the U.S. economy may end up with more growth and revenue than the CBO's fiscal deficit forecast, which Simons said does not include tariff income. "When you're fairly uncertain about the magnitude of near-term deficits and there are two-sided risks, it makes sense to keep the coupon auction sizes the same," the Jefferies' chief economist said. Investors are also expecting changes to the Treasury's debt buybacks launched in 2024, meant to enhance bond market liquidity. Buybacks provided a regular outlet for investors to sell back to the Treasury older and less liquid off-the-run securities across the yield curve. Lou Crandall, chief economist at money market research firm Wrightson ICAP, thinks the Treasury will bump up buybacks in the 20-year and 30-year maturities, which have been "massively oversubscribed". He added that total offers for those debts have exceeded the operational maximum amount by nearly 7-to-1 in 20-year bonds and more than 5-to-1 in the 30-year sector. In contrast, the Treasury has retired just $2.7 billion in par value terms in the seven- to 10-year sector, Crandall said. "The more aggressive level of dealer participation in bond-sector buybacks probably does warrant an increase in redemption operations at the long end," he noted. "The taxpayer cost-savings of retiring less liquid off-the-runs in the bond sector are real, as are the market-functioning benefits."
Washington Post
4 days ago
- Business
- Washington Post
US-China trade talks: Can China reduce its export dependence?
BEIJING — China's high dependence on exports will likely be a key focus of a new round of U.S.-China trade talks this coming week in Stockholm, but a trade deal would not necessarily help Beijing to rebalance its economy. U.S. Treasury Secretary Scott Bessent has said he hopes the negotiations can take up this issue, along with China's purchases of oil from Russia and Iran, which undercut American sanctions on those two countries.
Wall Street Journal
6 days ago
- Business
- Wall Street Journal
U.S. Treasury Yields Rise as Risk Appetite Dims Demand
1039 GMT – U.S. Treasury yields rise in midday European trade, as better risk appetite takes a toll. 'Risk appetite could be fueled by positive developments around trade negotiations and could weigh on bonds,' Excess' Dat Tong says in a note. 'In this regard, yields could react to any developments or setbacks in trade negotiations,' the senior financial markets strategist says. In the most recent development, the U.S. and Japan agreed on a trade deal, with President Trump confirming a 15% tariff on Japanese exports. The two-year Treasury yield is up by 2 basis points at 3.849%, while and the 10-year yield rises 3.8 basis points to 4.373%, according to Tradeweb. ( 0754 GMT – Yields on U.K. government bonds rise, tracking similar moves in global sovereign bond yields after a poor performance at an auction of 40-year Japanese government bonds. The 40-year Japanese bond yielded 3.375% at the auction, the highest level on record, and had the weakest demand since 2011, driving all Japanese government bond yields higher, Deutsche Bank Research analysts say in a note. The rise has cascaded across global sovereign bond markets, the analysts say. Ten-year U.K. government bond yields climb 4 basis points to last trade at 4.612%, Tradeweb data show. (
Yahoo
11-07-2025
- Business
- Yahoo
US customs duties reach record $27 billion in June, spurring small surplus
By David Lawder WASHINGTON (Reuters) -U.S. gross customs duties revenue grew to a record $27.2 billion in June as collections from President Donald Trump's tariffs gained steam, combining with calendar shifts in receipts and outlays to produce a $27 billion federal budget surplus for the month, the U.S. Treasury said on Friday. The tariff receipts, which have increased steadily over the past three months, helped push total June budget receipts up 13%, or $60 billion, to $526 billion, a record for the month. June outlays fell 7%, or $38 billion, to $499 billion, the Treasury said. Adjusting for calendar shifts of some revenues and benefit payments, the Treasury said that June would have shown a budget deficit of $70 billion. The data shows that tariff revenues are starting to build into a significant revenue contributor, with customs duties increasing fourfold to $27.2 billion on a gross basis and $26.6 billion on a net basis in June after refunds. Customs receipts for the first nine months of the fiscal year also topped $100 billion for the first time on an annual basis, reaching a record $113.3 billion on a gross basis and $108 billion on a net basis. The 2025 fiscal year runs from October 1, 2024 to September 30, 2025. The overall year-to-date deficit, however, increased 5%, or $64 billion, to $1.337 trillion, as outlays for health care programs, Social Security, defense spending and interest on the national debt all increased, the Treasury said. Receipts for the first nine months of the fiscal year rose 7%, or $254 billion, to a record $4.008 trillion, while outlays grew 6%, or $318 billion, to a record $5.346 trillion. Treasury Secretary Scott Bessent earlier this week suggested a steeper ramp-up in tariff collections, telling a cabinet meeting that the U.S. had taken in about $100 billion in tariff income so far this year, with that figure possibly growing to $300 billion by the end of 2025. A Treasury spokesperson said Bessent was referring to the calendar year - essentially the period since Trump returned to office - and not the fiscal year. Reaching $300 billion in tariff collections by December would imply a substantial increase in collections in the coming months and steep and broad tariff increases from current levels. Bessent added that the CBO has estimated tariff income will total about $2.8 trillion over 10 years, "which we think is probably low." Trump has set a new August 1 deadline for higher "reciprocal" tariff rates set to kick in on nearly all U.S. trading partners, with room for negotiations with some countries in the next three weeks for deals to lower them. Those duties will bring in "the big money," Trump said. Since those remarks on Tuesday, the U.S. president has put his tariff assault into overdrive, announcing 50% levies on copper imports and goods from Brazil and a 35% tariff on Canadian goods, all due to start on August 1. The Trump administration is preparing more sector-based tariffs on semiconductors and pharmaceuticals. Sign in to access your portfolio
