U.S. Record Debt Sales Continue as Deficits Head to $1 Trillion

Pedestrians walk near the U.S. Treasury building in Washington, D.C. Photographer: Andrew Harrer/Bloomberg

It is already well known that the United States Department of the Treasury announced plans to maintain a record of debt sales as Republicans and Democrats continue a frenzy of expenses that are expanding the deficit even when economic growth remains strong.

In this way, one could say that US President Donald Trump is willing to sign legislation to suspend the debt limit and increase domestic and defense spending, pushing the annual budget deficit to more than $ 1 billion. Certainly, this is driving the Treasury to maintain its long-term debt issuance at a record $ 84 billion for the third consecutive quarter. The deficit was $ 779 billion in the fiscal year 2018.

And it is that the emission level exceeds the previous records set in 2009 when the United States was recovering from the worst recession since the Great Depression.

Important facts

It should be noted that loans are increasing following tax cuts backed by Republicans that have driven economic growth and helped boost unemployment to a minimum of half a century. Even so, the Federal Reserve is expected to reduce interest rates by a quarter of a point later on Wednesday, as a result of global anti-war winds related to Trump’s trade war.

Thus, the Treasury will sell $ 38b in three-year bonds on August 6, $ 27b in 10-year bonds on August 7, $ 19b in 30-year bonds on August 8; Auctions to raise $ 26.7b in new cash. In this way, the department details the increases in the issuance of TIPS, according to previous guidance.

Likewise, the bipartisan budget agreement that Trump reached with Congress will suspend the debt limit until mid-2021. The House passed legislation last week and the Senate is expected to vote on it this week. In addition, the Treasury Loan Advisory Committee, composed of merchants and investors, urged Congress to repeal the debt limit before that due date, according to a statement to the Secretary of the Treasury.

Meanwhile, the Treasury said it currently does not anticipate further changes in the size of nominal coupon issues and floating rate values for the rest of the current calendar year.

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Source: Liz McCormick and Saleha Mohsin | Bloomberg