Now that the debt-ceiling drama has moved into the rearview mirror, Treasury debt issuance is set to accelerate as the U.S. government begins to replenish its cash reserves. The front end of the yield curve will bear the brunt of the supply deluge, with more than $1 trillion in Treasury bill issuance expected prior to year-end.1 This week’s calendar includes more than $170 billion in T-bill issuance today, with three more bill auctions set for tomorrow and Thursday (sizes to be announced).
The record-setting volume of T-bill issuance likely factored into the decision by the Federal Reserve (Fed) last week to hold interest rates steady. During his post-meeting press conference, Chair Jerome Powell tried to reassure investors that the Fed will be “monitoring market conditions carefully” should higher T-bill yields create greater stress in the banking system as more depositors find better alternatives.2
This week’s economic calendar is relatively light, including housing starts data out today, existing home sales numbers on Thursday and S&P Global Manufacturing and Services Purchasing Managers’ Index data released Friday.3
Sources:
1Yahoo! Finance – The Treasury Department may issue $1.6 trillion in T-bills this year as it rebuilds its coffers after the debt ceiling deal; 6/6/2023
2The Federal Reserve Board – Transcript of Chair Powell's Press Conference June 14, 2023; 6/14/2023
3MarketWatch – U.S. Economic Calendar; as of 6/20/2023
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