Treasury Reveals Plans To Gradually Increase Size Of Securities Auctions

The Treasury Department on Wednesday announced plans to gradually increase the size of its securities auctions in order to meet intermediate to long-term borrowing needs.

The Treasury said it plans to auction $112 billion worth of long-term securities next week, including $48 billion worth of three-year notes, $40 billion worth of ten-year notes and $24 billion worth of thirty-year bonds.

Last month, the Treasury sold $46 billion worth of three-year notes, $35 billion worth of ten-year notes and $20 billion worth of thirty-year bonds.

While the ten-year note auction attracted modestly above average demand, the thirty-year bond auction attracted average demand and the three-year note auction attracted below average demand.

The results of this month’s three-year note auction will be announced next Tuesday, the results of this month’s ten-year note auction will be announced next Wednesday and the results of this month’s thirty-year bond auction will be announced next Thursday.

The Treasury also said it intends to continue gradually increasing coupon auction sizes in the upcoming November 2023 to January 2024 quarter.

“As these changes will make substantial progress towards aligning auction sizes with projected borrowing needs, Treasury anticipates that one additional quarter of increases to coupon auction sizes will likely be needed beyond the increases announced today,” the Treasury said.

The Treasury plans to increase the auction sizes of two-year and five-year notes by $3 billion per month, three-year notes by $2 billion per month, and seven-year notes by $1 billion per month.

As a result, the auction sizes of two-year, three-year, five-year and seven-year notes will increase by $9 billion, $6 billion, $9 billion, and $3 billion, respectively, by the end of January 2024.

The Treasury also said it plans to increase both the new issue and the reopening auction size of the ten-year note by $2 billion and the thirty-year bond by $1 billion. The Treasury plans to maintain the 20-year bond new issue and reopening auction size.

In a letter, Treasury officials said the recent increase in treasury yields is “partially a response to stronger-than-expected activity and labor market data.”

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