Bond Traders Are About to Grasp the Magnitude of the Treasuries Deluge

By Brian Chappatta and Alex Harris˜ñ

The non-partisan Congressional Budget Office on Monday is set to release its latest projection for the U.S. budget deficit. In June, before the tax overhaul and Congress’s decision to ramp up spending over the next two years, the estimate was for a $563 billion shortfall in fiscal 2018, rising to $689 billion the following year. Both of those figures are expected to climb, which would put the onus on the Treasury Department to bridge the shortfall with more borrowing.

“The CBO report will certainly restart the conversation on how high deficits are going to be in the coming years,” said Gennadiy Goldberg, senior U.S. rates strategist at TD Securities. “The market still hasn’t caught on to the fact that deficits in the 2019 fiscal year are going to be immensely higher than this year.”

Treasury’s enlarged coupon auctions remain front and center

  • April 9: $48 billion of three-month bills; $42 billion of six-month bills
  • April 10: Four-week bill sale (size to be announced Monday); $30 billion of three-year notes
  • April 11: $21 billion of 10-year notes
  • April 12: $13 billion of 30-year bonds

(For We Hold These Truths  take on war spending see Our Money )