CNH: Familiar Ranges Hold, Inflation Data In Focus This Week

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• May’s refunding round saw guidance as well as coupon sizes for the current quarter unchanged.
• The August round (Jul 28-30) could prove more compelling, reflecting both pressure at the long end of the Treasury curve as well as a shifting fiscal outlook amid tariff revenues contrasted with impending tax cuts (not to mention the likelihood of approaching the debt limit at around that time if it’s not lifted).
• Future Coupon Upsizing: We’ve seen some expectations that Treasury could lean against some of those trends in the August refunding, with potential signals if not immediate action on adjusting buybacks or even reducing issuance duration in order to reduce pressure on the long end. MNI’s current expectation is that coupon sizes will only be increased in early 2026. We will update in our next Deep Dive at end-June, with our full refunding preview coming in late July.
• Upcoming issuance: June is set to see $315B in nominal Treasury coupon sales, in addition to $23B in 10Y TIPS and $28B FRN for a total of $366B. Sales for the month start in the coming week, on Tuesday June 10 with $58B of 3Y Note, Wednesday June 11 with $39B of 10Y Note, and Thursday June 12 with $22B of 30Y Bond.
• May Auction Results: Against a backdrop of continued steepening pressure for global sovereign curves, May’s coupon auctions saw strong sales at the short-end/belly contrasted with tails at the long-end. 

Treasury had $84B in "extraordinary measures" available to keep the government financed as of June 4 per a release Friday. That is up from $68B a week earlier though Treasury has exhausted three-quarters of the total initially available ($362B) when the debt limit impasse began in January.

• Combined with a pullback in Treasury cash ($376B), the total resources available to avert an "x-date" in the summer are down to a total $460B, the lowest since April 10 before the annual tax take accelerated.
• There will be another uptick in Treasury cash late next week/early the following week around the mid-June tax date, but this is likely to be the last major uplift before the summer at which point x-date speculation will pick up if Congress hasn't passed a debt limit increase by then.

As mentioned earlier, Citi pushed back their expectation for the next Fed cut following today's nonfarm payrolls report. They now see the Fed easing in September, vs their prior call for July. Citi had been one of the last holdouts for a cut before September. 

• "We expect slowing job growth and more importantly a rising unemployment rate in the coming months to push the Fed to resume rate cuts. But we think today’s headline numbers will keep the Fed on hold for now..."
• They maintain their view that rates will be cut 125bp overall: "We expect 75bps of rate cuts this year (25bps in September, October, and December) and 50bps next year (25bps in January and March). Risks skew toward more aggressive cuts, and we would not be too surprised by a repeat of last year with the Fed cutting 50bps in September after declining to cut in July."
• On NFP, they note the uptick in the unemployment rate in particular: "Most importantly, we take seriously that the unemployment rate nearly rounded up to 4.3% (4.244% in May is a new cycle high) and would be closer to 4.6% if not for the drop in labor force participation."