In an official statement released today, the U.S. Department of the Treasury provided updated estimates regarding privately-held net marketable borrowing for the first two quarters of 2024. The Treasury anticipates borrowing $760 billion during the January-March quarter, with an assumed end-of-March cash balance of $750 billion. This borrowing estimate is $55 billion lower than previously announced in October 2023. The reduction is mainly attributed to higher net fiscal flows and a higher beginning-of-quarter cash balance.

Moving ahead, the Treasury expects to borrow $202 billion in privately-held net marketable debt during the April-June quarter, assuming an end-of-June cash balance of $750 billion. These borrowing projections come after the Treasury borrowed $776 billion in privately-held net marketable debt during the October-December 2023 quarter, concluding it with a cash balance of $769 billion.

It is noteworthy that the borrowing estimate for the October-December quarter remained unchanged, although the ending cash balance was $19 billion higher than initially projected. The increase was primarily due to additional financing sources, including lower-than-expected discount on marketable borrowing.

While the Treasury's Quarterly Refunding details are yet to be released, it is anticipated that additional financing information will be disclosed on Wednesday, January 31, 2024, at 8:30 a.m.

It is important to clarify that the Treasury's privately-held net marketable borrowing excludes rollovers of Treasury securities held in the Federal Reserve System Open Market Account (SOMA). However, it does include financing required due to SOMA redemptions. While secondary market purchases of Treasury securities by SOMA do not directly impact net privately-held marketable borrowing, they could increase the amount of cash raised for a given privately-held auction size when the securities mature, assuming the Federal Reserve does not redeem any maturing securities.

In line with these projections, the Treasury estimates that $39 billion of SOMA Treasury holdings dated March 31, 2024, are expected to be redeemed on April 1, 2024. These redemptions will be considered as part of the March redemption cap by the Federal Reserve, although they are not reflected in the $760 billion borrowing estimate mentioned above, as the settlements are scheduled for April.

Similarly, $23 billion of SOMA Treasury holdings dated June 30, 2024, are projected to be redeemed on July 1, 2024. These redemptions will also be considered as part of the June redemption cap but are not reflected in the $202 billion borrowing estimate, as the settlements are scheduled for July.

Given the revised borrowing estimates, the U.S. Treasury is adjusting its financial plans for the coming quarters while considering various factors that may impact market conditions and fiscal flows. The updated figures provide insights into the government's projected borrowing needs, contributing to transparency and facilitating informed decision-making.