In an official statement released today, the U.S. Department of the Treasury has provided its estimates for privately-held net marketable borrowing during the July-September 2024 and October-December 2024 quarters. These estimates play a crucial role in shaping the country's financial landscape and provide insights into the state of the economy.

According to the Treasury's projections, the borrowing for the July-September 2024 quarter is anticipated to amount to $740 billion in privately-held net marketable debt. This prediction takes into account an expected cash balance of $850 billion by the end of September. Notably, the current borrowing estimate is $106 billion lower than the figure announced in April 2024. The reduction primarily stems from lower Federal Reserve System Open Market Account (SOMA) redemptions and a higher beginning-of-quarter cash balance.

Moving on to the October-December 2024 quarter, the Treasury expects to borrow $565 billion in privately-held net marketable debt, assuming an end-of-December cash balance of $700 billion. This projected borrowing comes after the April-June 2024 quarter, in which Treasury borrowed $234 billion in privately-held net marketable debt and closed the quarter with a cash balance of $778 billion.

Notably, the April 2024 borrowing estimate was $243 billion, with an anticipated end-of-June cash balance of $750 billion. The actual borrowing during that quarter was slightly lower at $234 billion, partly due to higher net cash flows and lower SOMA redemptions. However, a higher ending cash balance of $28 billion offset some of these factors, resulting in a $9 billion reduction in privately-held net marketable borrowing.

It is important to highlight that additional details regarding financing plans and strategies related to Treasury's Quarterly Refunding will be made available on Wednesday, July 31, 2024, at 8:30 a.m.

Moreover, the Treasury clarified that privately-held net marketable borrowing excludes rollovers of Treasury securities in the SOMA portfolio but includes financing necessitated by SOMA redemptions. The Treasury further explained that secondary market purchases of Treasury securities by the SOMA do not directly impact net privately-held marketable borrowing. However, when these securities mature, they could increase the cash raised per auction if the Federal Reserve does not redeem any maturing securities.

The Federal Open Market Committee's decision, announced on May 1, 2024, to reduce the cap on redemptions of Treasury securities from SOMA portfolio from $60 billion per month to $25 billion per month is expected to impact future borrowing requirements.

Lastly, the Treasury's assumption of an end-of-December cash balance of $700 billion aligns with the expiration of the debt limit suspension on January 1, 2025. This assumption is based on anticipated cash flows and complies with the relevant authorities and obligations, including those under the Fiscal Responsibility Act of 2023. It is worth noting that the actual cash balance on January 1, 2025, may vary from this assumption due to potential changes to cash flows at the end of 2024.

These estimates and projections from the U.S. Department of the Treasury shed light on the nation's borrowing needs and help shape financial strategies for the third and fourth quarters of 2024.