US TSYS/SUPPLY: Treasury Starts Ramping Up Bill Issuance To Rebuild Cash Pile
Treasury has made its first indication of its cash management plans since last week's $5T increase in the debt limit paved the way for a rebuild in the Treasury General Account: "Treasury plans to increase issuance of Treasury bills to continue financing the government and to gradually rebuild the cash balance over time to a level more consistent with Treasury's cash balance policy."
- Treasury also said that it would aim for a cash balance of $500B by end-July, "before approaching levels consistent with Treasury's cash balance policy in September." And not surprisingly, "Treasury will provide further updates about its issuance plans as part of the August refunding announcements."
- That guidance points to a rebuild to $850B by end-September, which was in the last quarterly Refunding financing requirement document. Treasury's last daily report showed $372.2B in cash as of July 3 so if that target is adhered to, that's over $470B in net cash to raise in just under 3 months.
- As largely expected, to rebuild cash Treasury will rely on benchmark bills and "specifically, the 4-, 6-, and 8-week bills", as opposed to cash management bills (which are no longer anticipated to be issued).
- On Wednesday it will sell $65B in 17-week bills, but is upping the ante with $80B in 4-week bills and and $70B in 8-week bills this Thursday, each of which represents a $25B increase on the prior auction. Those will raise a net $15B on July 15 (alongside $31.4B in net coupons).
- As we noted Monday, the TGA rebuild will weigh on what is now an "abundant" level of reserves currently north of $3.2T, with peak downside pressure on reserves likely to come in mid-September alongside the next key tax date.
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JGB TECHS: (M5) Rallies Off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.19 @ 15:53 GMT Jun 06
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
US TSYS/SUPPLY: MNI UST Issuance Deep Dive: June 2025
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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.
US FISCAL: Extraordinary Treasury Measures Tick Up As Cash Depletes
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.
