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Treasury’s Tapering Seen Outpacing Fed, With $1 Trillion in Cuts

  • Size of quarterly debt sale seen falling first time since 2016
  • Wednesday’s refunding announcement comes hours before the Fed
Short-Term Increase In U.S. Debt Ceiling Passes Senate
Photographer: Stefani Reynolds/Bloomberg
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The Federal Reserve won’t be the only one announcing a taper on Wednesday. The Treasury Department, for the first time in more than five years, will likely unveil a scaling down of its behemoth quarterly sale of longer-term securities.

In time, the Treasury’s reduction in issuance of coupon-bearing debt -- notes and bonds with interest payments -- will outweigh the Fed’s zeroing out of its quantitative-easing purchases of Treasuries. It’s a dynamic that hasn’t captured sufficient attention from investors, according to Wells Fargo & Co., and could help limit increases in borrowing costs as the central bank withdraws stimulus.