JPMorgan Sees Treasury Avoiding Bond Sales Tweak Due to Midterms

Macro
โดย Bloomberg·Read original
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JPMorgan strategists expect the US Treasury to leave its forward guidance on auction sizes unchanged in next week's quarterly refunding statement to avoid rattling bond markets ahead of the November midterm elections. The team led by Jay Barry notes that a $3.7 trillion funding gap over the next four fiscal years warrants removing the phrase "at least" from the current guidance that auction sizes will remain steady for "at least the next several quarters." However, they see political considerations prevailing, as adjusting the language could spook the market and push long-maturity borrowing costs higher at a time when yields are already near their highest since President Donald Trump took office. Treasury Secretary Scott Bessent has previously linked issuance plans with yield levels, and the strategists believe the Treasury may wish to avoid signaling an expected increase in duration supply. The November refunding announcement falls just one day after the midterm elections, and the bank says it may take until 2027 for officials to tweak their guidance.

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