MNI UST Deep Dive: Refunding Preview - May 2025

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Refunding Preview: Pushing Back The Terming Out

• The coming week brings the US Treasury's quarterly refunding process, split as usual into two announcements: the financing estimates for FYQ3 and FYQ4 out Monday April 28 (3pm ET), followed Wednesday April 30 by the expected coupon auction sizes for the upcoming 3 months (May/June/July) along with associated materials (8:30am ET).
• In this preview we look at financing estimates, the upcoming quarter’s coupon auction sizes, and Treasury guidance on future issuance, as well as sell-side analyst expectations.
• Financing Estimates: The latest financing estimates will show a large jump in borrowing requirements in the current quarter vs previous forecasts, but these figures are deceptive due to Treasury cash swings.
• Guidance: Recent market volatility has reduced the possibility that Treasury will adjust its guidance that it will keep nominal coupon auction sizes unchanged for “at least the next several quarters”, as changing this would signal an intention to increase bond supply in the near future.
• Future Coupon Upsizing: Treasury Secretary Bessent said in February that a terming out of the Treasury’s maturity profile was "a long way off, and we're going to see what the market wants". With the Treasury curve steepening sharply since then with term premia rising amid tariff-related market volatility, it doesn’t seem like an opportune time to test the waters. For now MNI is pencilling in nominal coupon issuance rises in February 2026’s refunding.
• Upcoming issuance: Increases in nominal coupon sizes are not expected for the upcoming quarter. ($1B increases in 5Y and 10Y TIPS sizes are largely expected however.) May is set to see $324B in nominal Treasury coupon sales, in addition to $18B in 10Y TIPS and $28B FRN for a total of $370B – a joint-post-Oct 2021 high.
• April Auction Results: Long-end strength stood out in April’s coupon auctions, which will have come as a relief given broader concern around UST duration demand in the wake of US President Trump’s April 2 reciprocal tariff announcement. Short-end results were more mixed.