US Treasury To Reduce Size of 2 and 3yr Note Auctions

The United States will gradually cut back the size of two- and three-year note auctions over the next three months to reflect a better budget outlook, the U.S. Treasury said on Wednesday.

In a statement, Treasury Deputy Assistant Secretary for Federal Finance James Clark said the reductions would begin with the November three-year note auction announced on Wednesday.

“The magnitude and duration of the offering-size reductions will depend on the pace and extent of the fiscal improvement,” he said.

A Treasury official said the reductions would probably be in line with recent cuts, of about $1 billion per month in each security.

“I expect it’s going to follow much the same pattern as recent coupon reductions that we have had, so that’s a billion per month for the next three months,” he said.

That would equate to an annualized $66 billion reduction in total issuance if the reductions stopped after three months, the official said.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza