WASHINGTON (Reuters) -U.S. Treasury Secretary Scott Bessent said on Wednesday that he anticipates robust demand continuing in the Treasury debt market and the department will gradually adjust coupon auction sizes to avoid market disruptions.
Bessent told a Federal Reserve Bank of New York Treasury markets conference that Treasury would maintain “regular and predictable” offerings of coupon securities to safeguard the Treasury market as a benchmark for stability amid changing borrowing needs.
“For Treasury auctions to be successful, we need to be attentive to market participants, but we will not change our overall protocols,” Bessent said.
“We will remain analytical in our decision-making, adjusting issuance gradually to avoid market disruptions. We will provide public forward guidance to the extent practicable. And we will regularly canvass the market for feedback on how our issuance decisions are being received,” he added.
Bessent said that Treasury bill demand was increasing due to money market funds and stablecoin providers, as well as from banks that have expanded Treasury holdings. He added that the Treasury supports reforms to banks’ supplementary leverage ratio, which will further increase demand.
Bessent repeated guidance that the Treasury will not likely need to change coupon auction sizes for at least the next several quarters.
“Existing financing capacity from current auction sizes and robust demand in the bill market have given us flexibility to manage our upcoming potential borrowing needs,” he said.
He added that the Treasury would not have to make immediate decisions on auction changes due to flexibility provided by a slight reduction in the U.S. deficit and the Federal Reserve’s recent announcement that it will start purchasing Treasury bills with proceeds from its MBS holdings.
(Reporting by David Lawder; Editing by Andrea Ricci)
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