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The Treasury Department said Monday it expects to borrow $550 billion in the fourth quarter, which is $150 billion higher than previously estimated. The increase was driven, in part, by projections of fiscal activity, greater than projected discount on marketable securities, and lower nonmarketable financing, the department said. The updated forecast includes an end-of-quarter cash balance of $700 billion.
Looking ahead to the first quarter of 2023, Treasury said it expects to borrow $578 billion in net marketable debt with a cash balance of $500 billion.
In the July-September quarter, Treasury borrowed $457 billion and ended with a cash balance of $636 billion. This was higher than the estimate of $444 billion.
The decrease was also due to an increase in receipts and a decline in expenditures.
The yield on the 10-year Treasury note remained above 4% on Monday on the outlook for aggressive Fed monetary policy.
Additional financing details related to the Treasury’s quarterly refunding will be released at 8:30 a.m. Eastern on Wednesday.
Economists note that the Treasury is likely to run up against the debt limit this quarter, although “extraordinary” fiscal maneuvers can keep the government below the ceiling until some time in 2023.
At that time, a major fight over the borrowing constraint could happen, particularly if Republicans gain control of at least one chamber of Congress, said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
The yield on the 10-year Treasury note
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remained above 4% over much of the past week on expectations the Federal Reserve might ultimately boost its benchmark rate higher than previously thought given sticky inflation readings.
