MNI UST Issuance Deep Dive: June 2026

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EXECUTIVE SUMMARY:

• The lack of revision to Treasury's guidance on future nominal coupon size increases ("Based on current projected borrowing needs, Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters") in the May Refunding round is likely to have further pushed back expectations for the timing of the next size increase to well into 2027 if not beyond. This was probably the most closely-eyed portion of the refunding announcement, with some expectations that it would be revised to indicate a nearer-term upping of auction sizes, perhaps by removing the words "at least".
• Coming into the refunding round, most analysts saw February 2027 as the base case for the next coupon upsizing with some having pushed back their expectations from November 2026 in recent months; with some seeing bigger coupon sizes as soon as November 2026 (Danske) with others only seeing changes much further out (Mizuho: FY 2029).
• The TBAC minutes for May's refunding also noted "Dealers generally anticipate that nominal coupon auction sizes might next increase in early CY2027, and expect Treasury to modify its forward guidance several quarters ahead of such a change".
• A revision in the guidance at this meeting is probably inconsistent with an upsizing in early 2027 (ie February), which is only 3 quarters away, so the base case probably shifts to May 2027.
• Since the announcement and its unchanged guidance, we've seen one analyst push back expectations (TD Securities now sees May 2027 having previously expected February 2027).
• MNI's central expectation had been either February or May 2027 and the latter is obviously looking more likely, particularly since we had (in a close call) expected a softening of guidance at this refunding.
• The actual coupon size announcements for the May refunding auctions and estimates for the quarter brought no drama: the updated sizes through the coming months (including MNI Ests) is in the table below.
• The quarter’s financing requirements probably contained the most surprises of the refunding round, and even here they were relatively modest.
• We go through those outcomes from the May refunding, as well as tweaks to 20Y refunding auction settlements, and analysts' views.
• Monthly Auction Review: May saw another month of slightly soft coupon auctions. The only trade-through was the 7-year UST, which saw a high yield just 0.1bp below the when-issued level. The 2- and 20-year lines came out on the screws, while tails were elsewhere.