Treasury Department readies record $112 billion bond sale to fund hefty COVID stimulus
- The Treasury Department is set to offer a record $112 billion in new debt during next week's quarterly sale, according to a Wednesday release.
- The department also plans to boost nominal debt issuance by $132 billion in the next three months compared to the previous quarter.
- Next week's sale adds to the department's efforts to pay off record amounts of stimulus. The Treasury has already raised more than $1.46 trillion since May to fund COVID-19 relief measures.
- The department expects to raise at least $1 trillion in additional debt for a second round of stimulus. Democrats and Republicans remain locked in negotiations over another spending package.
- Watch the 10-year yield update live here.
The Treasury Department plans to offer $112 billion in notes and bonds next week as the bill for widespread economic stimulus skyrockets.
The sum marks a record for the department's quarterly debt issuance. The Treasury will also pivot from issuing shorter-dated notes to focus on longer-term securities at the upcoming offering. By boosting the sale of longer-dated bonds, the department can lengthen the average maturity of outstanding government debt
Next week's sales include $48 billion worth of 3-year notes, $38 billion worth of 10-year notes, and $26 billion worth of 30-year bonds, according to the department's Wednesday release. In the three-month period ending in October, the department plans to boost nominal debt issuance by $132 billion compared to the prior quarter.
"Treasury continues to face unprecedented borrowing needs as a result of the federal government's response to the COVID-19 outbreak," the department said.
Treasury yields ticked slightly higher on Wednesday. Longer-dated bonds gained more than short-term notes amid the forecasted shift in supply.
The record debt sale arrives as Democrats and Republicans continue deliberating on a second round of fiscal relief. The $2.2 trillion CARES Act led the Treasury to boost issuance plans in 2020. The department has already raised $1.46 trillion since May 1 to fund the aid spending, and the Treasury expects at least $1 trillion in additional spending.
Another sharp increase in issuance could arrive should Democrats prevail in stimulus talks. While Republicans are pushing a $1 trillion package, Democrats approved a $3.5 trillion bill in the House.
Despite the deluge of new notes and bonds, investor demand has largely held strong. Yields remain at historic lows as investors shift to safe havens, with the 10-year yield reaching a record low by Tuesday's close. The Federal Reserve reiterated its plan to buy at least $80 billion in Treasurys a month as part of its own relief efforts, further bolstering the market.
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