A Drought of Treasury Bills Risks Muddying End of Fed’s Balance-Sheet Tightening
- BofA sees “real risk” of acute supply-demand imbalance
- Strong economy, job market boost tax receipts, curb debt sales
The US Treasury Department in Washington, DC.
Photographer: Mandel Ngan/AFP/Getty ImagesThis article is for subscribers only.
Treasury-bill investors that tussled with a swathe of issuance over the last year are now preparing to confront the opposite challenge: A pullback in sales that leaves them awash with cash that needs to be put to work elsewhere.
The government is expected to indicate further cuts to T-bill issuance for the May to July period on Wednesday. Bank of America Corp. expects $401 billion less net T-bill supply for the second quarter. Wells Fargo & Co. sees a $321 billion reduction, while Goldman Sachs Group Inc. is looking for $250 billion fewer bills.