Treasury To Reduce Sizes Of 2-year, 3-year Auctions

The Treasury Department said Wednesday it plans to reduce coupon auction sizes over the next quarter due to "modest" improvements in the forecast for fiscal 2015. Treasury said the reduction will occur in the 2- and 3-year securities, and it said the magnitude and duration of the reductions will depend on the pace and extent of the fiscal improvement. In comments to the Treasury Borrowing Advisory Committee, Deputy Assistant Secretary for Federal Finance James Clark said the current auction schedule would raise $100 billion more than primary dealers forecast in the current fiscal year, but that borrowing would have to increase in 2016 if the Federal Reserve decided not to reinvest at least some of the maturing proceeds from the System Open Market Account. The borrowing committee recommended $1 billion cuts to both the 2- and 3-year auction sizes starting in November. Treasury is offering $66 billion of securities on Nov. 15 to refund $59.8 billion of maturing notes, which will raise $6.2 billion of new cash.

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