Treasury Refunding Week
Friday's Settlements
It’s Quarterly US Treasury Refunding week! So with that Econemotions readers should have been well enough informed about the US bond markets potentially for yields to rise as players build in a decent concession to garner some higher coupon rates come auction time. Anyway we thought the recent US Treasury announcements were curious to say the least especially this one where:
During the January - March 2021 quarter, Treasury expects to borrow $274 billion in privately-held net marketable debt, assuming an end-of-March cash balance of $800 billion. The borrowing estimate is $853 billion lower than announced in November 2020. The decrease in privately-held net marketable borrowing is primarily driven by a higher beginning-of-January cash balance as a result of lower-than-assumed expenditures 1
Just a small $853bn over estimate!
Here is the balance chart:
So get ready for this weeks supply and here is what’s on tap:
The U.S. Department of the Treasury is offering $126 billion of Treasury securities to refund approximately $62.9 billion of privately-held Treasury notes and bonds maturing on February 15, 2021. This issuance will raise new cash of approximately $63.1 billion. The securities are:
A 3-year note in the amount of $58 billion, maturing February 15, 2024;
A 10-year note in the amount of $41 billion, maturing February 15, 2031; and
A 30-year bond in the amount of $27 billion, maturing February 15, 2051.
The 3-year note will be auctioned on a yield basis at 1:00 p.m. ET on Tuesday, February 9, 2021. The 10-year note will be auctioned on a yield basis at 1:00 p.m. ET on Wednesday, February 10, 2021. The 30-year bond will be auctioned on a yield basis at 1:00 p.m. ET on Thursday, February 11, 2021. All of these auctions will settle on Tuesday, February 16, 2021.2
With all this supply the US Govt 10y yields have moved back up to the fib .618:
This has also steepened up the US treasury curve dramatically, here is our futures 5s30 chart or FOB:
As far as the settlements from Friday:
As you can see Energy is the sector of outperformance thus far this year and the Russell2k is leading the equity complex. Our 2xRty vs NQ futures spread continues to show R2k positive momentum:
Also of note is this Dax Futures chart where the preCovid high continues to plague the advance:
Alight that’s it, nice job by the Bucs and Tom Brady last night, completely dismantling Mahomes with their perfected 2 high safety defense and stellar Defensive line rush. NO doubt Tom Brady is the GOAT and well deserved! Alright stay quick and stay fresh and keep the mind busy, always search for opportunity, don’t rush it, don’t force and let the market do what it will do!
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https://home.treasury.gov/news/press-releases/jy0011
https://home.treasury.gov/news/press-releases/jy0016