U.S. Treasury’s refinancing announcement, detailing the three-month borrowing needs and the balance to be held in the Treasury General Account, is due on May 1.
The announcement, detailing the three-month borrowing needs of the U.S. government, has become pivotal in the post-coronavirus world of record debt, elevated inflation and interest rates. The announcement also discloses the size and duration of the bond issuance, as well as the balance to be held in the Treasury General Account .
According to Saxo Bank, the upcoming QRA is likely to offer relief, with quarterly gross issuance set to decline from its peak of $7.2 trillion for the first time in two years. The TGA is a liability on the Fed’s balance sheet and must be matched by assets. When the Treasury drains the TGA balance, money moves from the TGA account to bank accounts of individuals and businesses, boosting reserves available with commercial banks. That, in turn, boosts lending, leading to monetary easing in markets and the wider economy. An increase in the TGA balance has the opposite effect.
“If the TGA is maintained at its current level of $750 billion or lower, it implies no change or the potential release of more funds into the economy, providing a boost to economic activity. This might lead to bullish sentiment in risky assets such as stocks and lower-rated corporate bonds," Spinozzi noted.
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