How convenient

The U.S. Treasury this week releases the next stage of its strategy to cover a deficit that’s expected to surpass $1 trillion this fiscal year, as the department continues to search for new ways to attract buyers for its record debt issuance.


It needn’t agonize just yet, however. For the next few months the Federal Reserve will be scooping bills out of the market -- part of its effort to calm the repo market -- about as fast as the government can pour them in.


Dealers roughly agree on the contours of Wednesday’s quarterly refunding announcement. They reckon the Treasury will keep auctions of 3-, 10- and 30-year debt unchanged next week at a record total of $84 billion. Wall Street also expects updates on two proposals: An issue linked to SOFR, which is the benchmark borrowing rate that’s intended to replace Libor, and a 20-year bond.

Which is why the Fed always follows the one year Treasury.  The Fed cooperates with the primary dealer system and the primary dealer system is a bit congested at the moment.