Treasury cuts debt auctions that accelerated during pandemic

WASHINGTON – The US Treasury Department plans to start downsizing some of its public debt auctions, a sign that the government’s huge borrowing needs due to the pandemic are starting to ease.

The government has started selling debt at accelerated levels to fund the more than $ 1 trillion support bills that Congress began to pass in the spring of 2020 after closures triggered by the pandemic forced millions of people. Unemployed.

The Treasury on Wednesday released an auction schedule for securities ranging from two-year notes to 30-year bonds.

The cuts announced on Wednesday would result in a reduction of $ 84 billion in Treasury auctions from November to January 2022.

Over the next three months, the Treasury plans to reduce the size of two-year, three-year and five-year note auctions by $ 2 billion each on a monthly basis through the end of January.

Reductions in auction size were also announced for other government debt, including 10-year bonds and 30-year bonds.

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In some cases, the Treasury said some of those securities auctions had been “considerably higher than others in response to increased borrowing needs induced by the COVID-19 pandemic.”

The statement on reducing borrowing amounts for various treasury securities came as part of the government’s regular quarterly repayment announcements when it disclosed the timing of a cluster of auctions held each quarter.

The auction will take place next week and will include the sale of a $ 36 billion three-year note on Monday, a $ 39 billion 10-year note auctioned on Tuesday and a 30-year bond. years worth $ 25 billion auctioned on Wednesday.

Treasury auctions this quarter could change if Congress does not suspend or increase the debt limit. In a letter to Congress last month, Treasury Secretary Janet Yellen said the debt limit deal approved by Congress in October would allow the government to continue paying its bills until December 3.

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Yellen said the deal, which raised the debt ceiling by $ 480 billion, would provide “only a temporary reprieve” and urged lawmakers to act quickly to pass a larger increase in the debt ceiling in order avoid what she called a “catastrophic” government. default she warned could push the country into a recession.

Treasury officials said on Wednesday they had no update on Yellen’s December 3 estimate on when it might run out of wiggle room to continue using the extraordinary measures it used to continue to pay government bills.

Yellen said she had a “high degree of confidence” that the Treasury could continue to pay government bills until December 3, but she did not give a more specific date on which her margin would be. maneuver will be exhausted. December 3 is also the deadline Congress must meet to pass a budget bill to avoid a government shutdown.

Some private analysts have said that Yellen may have the option of not exceeding the $ 28.8 billion debt limit until February. Treasury officials said they were aware of the range of forecasts that have been made on when the extraordinary measures might be exhausted.

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The extraordinary measures used by Yellen consist mainly of withdrawing assets from government employee pension funds in order to create leeway to continue borrowing without reaching the debt limit.

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