Preview: Financing estimates due Monday at 20:00BST/15:00EDT; Quarterly Refunding due Wednesday at 13:30BST/08:30EDT

Financing Estimates: The US Treasury will release its Q2 financing estimates on Monday at 20:00BST/15:00EDT, followed by the Quarterly Refunding Announcement on Wednesday at 13:30BST/08:30EDT.

In Q1, the Treasury projected USD 574bln of borrowing, assuming an end-March cash balance of USD 850bln. For Q2 (April–June), it guided to USD 109bln in privately-held net marketable borrowing, assuming an end-June cash balance of USD 900bln. Updated projections for Q3 will also be released.

Wrightson expects a materially higher borrowing need than the Treasury’s initial estimate, looking for roughly USD 150bln in net market borrowing this quarter — implying a c. USD 40bln upward revision versus prior guidance. However, the end-March cash balance came in USD 45bln above assumptions, which partially offsets the funding requirement.

Looking ahead, Wrightson projects a sizeable USD 700bln borrowing requirement for Q3 (July–September), assuming the cash balance target remains at USD 900bln.

Quarterly Refunding:

The refunding announcement will be closely watched for any changes to issuance guidance. The current stance is that the Treasury “anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters,” and any deviation from this would be notable for markets.

While Wrightson expects this guidance to be maintained, it highlights that the Treasury is approaching a point where it will need to begin a more active discussion around increasing coupon sizes, although this is likely premature for the current refunding. 

Wrightson highlights that the February TBAC report noted a “robust discussion” around the trade-off between gradually increasing auction sizes earlier versus a more accelerated adjustment later, particularly as financing pressures build into 2027. While this raises questions around the durability of the “next several quarters” guidance, Wrightson say that any shift is more likely to become relevant by the August refunding.

Buybacks and Longer-Term Considerations:

The buyback programme will also remain in focus. In Q1, the Treasury guided to up to USD 38bln in off-the-run purchases for liquidity support, alongside up to USD 75bln in the 1-month to 2-year sector for cash management. Looking further ahead, potential changes to Fed balance sheet policy remain a longer-term consideration. Fed Chair nominee Warsh has signalled a preference for a smaller balance sheet and reduced holdings of longer-dated Treasuries. If implemented, this could reduce structural demand for duration and eventually require adjustments to issuance strategy.