US Treasuries auction: method and implications
Treasury to issue $ 3 trillion in Treasury bonds
The US Treasury Department on Monday said it plans to borrow nearly $ 3 trillion in the second quarter of 2020, five times the previous record. Federal government spends huge amounts of money to mitigate the impact of coronavirus on the American economy.
The Ministry of Finance said it would raise $ 2.999 trillion from April to June. This is more than the previous record full fiscal year of $ 1.8 trillion..
New borrowing target more than five times the previous quarterly record set in the second half of 2008 to tackle the financial crisis.
Asked if the market has the capacity to absorb such a huge amount of debt in just three months, a senior Treasury official told Reuters: «We really believe she exists».
«The increase in market borrowing is mainly driven by the impact of the COVID-19 outbreak, including spending on new measures to help individuals and businesses, changes in tax revenues, including a deferral of individual and business taxes from April to June to the end of July, and an increase in the estimated cash balance treasury at the end of June», – said in a statement from the US Treasury.
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In addition to these loans, the Ministry of Finance also announced that it expects to raise another $ 677 billion in the third quarter. Loan volume for the first quarter amounted to $ 477 billion.
The U.S. Congress has adopted numerous stimulus efforts to revive an economy stalled by social distancing efforts to stem the spread of the virus. Funds have been disbursed to date over $ 2 trillion, and finally another package is expected to help more than 30 million Americans on the brink of unemployment, as well as thousands of other businesses whose income streams are evaporating..
The Treasury also supports several Federal Reserve lending programs, which uses Treasury guarantees in programs aimed at providing an additional $ 2.2 trillion to finance businesses and households..
Since March 1 alone, the US national debt has grown by $ 1.5 trillion to $ 24.9 trillion, an increase of 6.4%. The budget deficit was $ 744 billion.
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