Treasury To Increase Auctions To Fund Upcoming $1 Trillion Annual Deficits

The U.S. Treasury announced Wednesday that it will boost government debt auctions by $30 billion through October to fund upcoming $1-trillion deficits.

What Happened

Treasury will increase monthly auctions for two-, three- and five-year notes by $1 billion per month between August and October; increase seven-, 10- and 30-year bonds by $1 billion over the next quarter; and introduce a two-month bill auction in October.

It is also considering a new auction for five-year inflation-adjusted Treasury Inflation-Protected Securities, or TIPS. 

Why It’s Important

The $30-billion increase between August and October represents a $3-billion acceleration from the May-July increase, and it sets the Treasury on pace to issue more than $1 trillion in marketable debt throughout the fiscal year.

This year’s sum, which is the most debt private investors have taken on since 2012, is meant to prepare the U.S. for deficits forecast at about $1 trillion per year from 2019 to 2022.

What’s Next

The Federal Reserve, whose balance sheet goals influence Treasury action, will report its monthly meeting minutes Wednesday afternoon.

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