Quarterly Refunding Primer [Repost]: Quarterly Refunding Announcement due Wednesday 13:30GMT/08:30EST

Analysis details (12:45)

Quarterly Financing Estimates (Monday at 20:00GMT/15:00EST)

The US Treasury announced it expects to borrow USD 569bln in privately-held net marketable debt in the Oct-Dec quarter, down from the USD 590bln it projected for Q4 in July. The lower estimate is due to higher start of quarter cash balance, partially offset by lower projected net cash flows. The projection still assumes an end-Dec cash balance of USD 850bln, albeit some had been looking for this to increase to USD 900bln. Looking ahead to Q1 '26 (Jan-Mar), the Treasury expects to borrow USD 578bln, assuming an end-March cash balance of USD 850bln. 

During the July–September 2025 quarter, the Treasury borrowed USD 1.058tln in privately-held net marketable debt and ended the quarter with a cash balance of USD 891bln. In July 2025, Treasury estimated borrowing of USD 1.007tln and assumed an end-of-September cash balance of USD 850bln. The USD 50bln difference in privately-held net marketable borrowing resulted primarily from the higher end-of-quarter cash balance and lower net cash flows. Excluding the higher-than-assumed end-of-quarter cash balance, actual borrowing was USD 10bln higher than announced in July. 

Quarterly Refunding Announcement (Wednesday at 13:30GMT/08:30EDT).

For the refunding, the Treasury maintained guidance that it expects to maintain nominal coupon and FRN auction sizes for at least the next several quarters; any change to this would be of note. However, Morgan Stanley expects current coupon sizes to remain steady until February 2027, with guidance expected to be maintained. Regarding TIPS, Morgan Stanley expects the Treasury will continue with incremental increases to the TIPS auction sizes, expecting the USD 19bln of 10yr TIPS re-opening auction to be maintained, with a USD 1bln increase to both the 5yr TIPS re-opening and the 10yr TIPS new issue. 

We will have a look at the upcoming buyback operations too for any changes. The prior refunding saw the Treasury state in H1'26, it plans to offer direct buyback access to a limited number of additional counterparties, based on their participation in Treasury auctions. Morgan Stanley "interpret this statement to mean that the additional eligible participants for buyback operations will be the largest participants in auctions by risk taken down".

One thing to bear in mind is the Fed's end of QT. From December 1st, the Fed will start to reinvest all maturing Treasury security holdings on its balance sheet, while it will continue to let mortgage-backed securities roll off the balance sheet; however, the payments will be reinvested into Treasury bills instead of MBS. Morgan Stanley writes that after QT ends, the Fed will deem an across-the-curve reinvestment strategy as most optimal, meaning more front-end UST demand relative to the status quo. 

Providing the nominal coupon auction sizes are left unchanged as per guidance, this is what the auction sizes would look like.​

05 Nov 2025 - 12:45- Fixed IncomeResearch Sheet- Source: Newsquawk