Treasury Quarterly Refunding

Download Full Report Here: https://media.marketnews.com/MNI_US_Deep_Dive_Issuance_2026_07_13a5883fb4.pdf August Refunding Preview: Guidance In Focus Again As Upsizing Draws Nearer * Treasury's August Refunding round begins Monday Aug 3 (3pm ET) with the Treasury's update on financing requirements for the current (Jul-Sep) and next (Oct-Dec) quarters. As usual, more attention will be on the full Refunding announcement on Wednesday (8:30am ET), in which any adjustments to the policy statement's guidance on future auction size increases will be the most closely-watched aspect. As time passes there are increasing chances of a change here, with consensus being for an upsizing in coupon auction amounts at some point in the next year. * Guidance: For now, Treasury will continue to lean on bill issuance instead of coupon upsizing, and will only be encouraged to avoid shifting the burden onto longer-maturity issuance especially given the recent rise in long-end yields. Though eventually the widening financing gap will require coupon upsizing, and our base case remains that will come in May 2027. In turn this may necessitate some softening in the guidance now. Last time, in May's refunding, we incorrectly anticipated that the guidance would be tweaked by removing the words "at least" from "Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters", which would keep open the possibility of increases next year ("next several quarters"); that outcome seems more likely this time. * Financing/Borrowing Expectations: Monday's financing requirements release is likely to see a slight increase to May's estimates of both financing needs and borrowing for the Jul-Sep quarter, with the following quarter set to see a slight sequential decline. * Buyback Announcement: It's most likely Treasury will again announce quarterly buybacks including $38B for liquidity support and $25B for cash management again. * Other topics to watch: Treasury asked primary dealers about changing the structure of 7Y auctions which could move to a schedule that includes new quarterly issuance with reopenings. Additionally there could be follow-up on a proposal to allow Treasury to invest excess cash from the TGA into the repo market, in part to reduce reserve and therefore repo market volatility. * Upcoming Supply: August's auctions begin with the anticipated refunding: Aug 11 with $58B in 3Y Note, Aug 12 with $42B in 10Y Note, and Aug 13 with $25B in 30Y Bond. * Monthly Auction Review: July's coupon auctions were mixed, with no clear underperforming segment of the curve, and no aggressively strong or weak individual auctions. The 2-, 3-, 10- and 30-year lines saw modest trade throughs, while the 5-, 7- and 20-year lines tailed.