Treasury slashes borrowing estimates for first three months of 2021

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Treasury slashes borrowing estimates for first three months of 2021


The Treasury Department said Monday it expects to borrow $274 billion in the first quarter, which is about one-third of the $853 billion previously estimated.

The decline was driven by a larger cash balance at the beginning of the quarter, the agency said. The fourth quarter ended with a cash balance of $1. 7 trillion, compared with the November estimate of $800 billion. The unexpected higher balance was the result of lower spending than assumed, the department said.

The updated forecast for the first quarter includes an estimated end-of-quarter cash balance of $800 billion.

Looking ahead to the second quarter, Treasury said it expects to borrow $95 billion in net marketable debt with a cash balance of $500 billion.

Treasury borrowed $597 billion in net marketable debt in the fourth quarter. This was slightly lower than the Treasury’s prior $617 billion estimate.

Additional financing details related to the Treasury’s quarterly refunding will be released at 8:30 a.m. Eastern on Wednesday. Treasury sets its debt management policy based on internal analysis and the advice it receives from the private sector and then announces changes as part of its quarterly refunding process.

Newly minted Treasury Secretary Janet Yellen is weighing issuing bonds with 50-year maturities as the average maturity of U.S. government debt fell dramatically in the past year amid a wave of new issuance to pay for pandemic relief. Former Treasury Secretary Steven Mnuchin passed on the idea, but the Treasury sold a 20-year bond in May 2020, marking the first issue at that maturity since 1986. 

Meanwhile, the yield on the 10-year Treasury note
TMUBMUSD10Y,
1.069%

was up slightly to 1.077% in trading Monday after momentarily trading near 1% on Wednesday. The 20-year Treasury
TMUBMUSD20Y,
1.651%

was yielding 1.653% but after hitting a near-term nadir at 1.582% last week.



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