U.S. Treasury keeps auction sizes steady after recent increases

Feb 3 (Reuters) - The U.S. Treasury Department said on Wednesday that its recent efforts to increase the size of nominal Treasury auctions have created sufficient capacity for its near-term funding, and that any new increases in funding needs will be met with increases in Treasury bill auction sizes or cash management bills.

The Treasury next week will sell $58 billion in three-year notes, $41 billion in 10-year notes and $27 billion in 30-year bonds, unchanged over last month.

The U.S. Treasury said on Monday it plans to borrow $274 billion in the first quarter, significantly lower than the November estimate of $1.127 trillion, with the decline due to the department’s higher cash balance at the beginning of January.

“Since April 2020, Treasury has substantially increased issuance sizes for nominal coupon and (floating rate note) securities and begun a gradual increase in (Treasury Inflation-Protected Securities) issuance. Treasury believes that these changes have created sufficient capacity to address near-term projected borrowing needs,” The Treasury said in a statement on Wednesday.

The Treasury last year issued record amounts of Treasuries to finance spending meant to offset the damage of COVID-19 related business shutdowns. A $900 billion stimulus bill was not signed into law until Dec. 27, however, leaving the Treasury with a larger than anticipated cash balance of $1.729 trillion at the end of 2020.

The first quarter borrowing projections do not account for any new fiscal spending. (Reporting By Karen Brettell; Editing by Toby Chopra)