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The U.S. Treasury Department said Monday it expects to borrow $2 trillion over the rest of the year as the federal government’s takes on debt to finance the response to the coronavirus pandemic.
In the third quarter, the Treasury now expects to borrow $947 billion in net marketable debt. That is $270 billion higher than estimated in May. The department assumes a cash balance of $800 billion.
Looking ahead to the fourth quarter, Treasury said it expects to borrow $1.2 trillion in net marketable debt with a cash balance maintained at $800 billion.
In a statement, Treasury said its new borrowing estimates for the third and fourth quarters “assume $1 trillion of additional borrowing need in anticipation of additional legislation being passed in response to the COVID-19 outbreak.”
Talks of another package remained deadlocked on Capitol Hill.
Treasury borrowed $2.75 trillion in net marketable debt in the second quarter and ended with a cash balance of $1.72 trillion.
This was lower than the Treasury’s prior $3 trillion estimate, which included a cash balance of $800 billion.
Analysts say the rush of new issuance is unlikely to dent appetite for government bonds this year, as the Federal Reserve’s bond-buying and pledge to keep policy easy have kept bond yields pinned down near their record lows.
The 10-year Treasury note yield TMUBMUSD10Y, 0.559% was up 2.6 basis points to 0.562% on Monday. Bond prices move inversely to yields.
Additional financing details related to the Treasury’s quarterly refunding will be released at 8:30 a.m. Eastern on Wednesday.
