BMO Capital Markets features in its "Fixed Income Strategy Market Update, a piece entitled, "Treasury Takes Issue with Issuance. BMO's Natan Magid writes, "The Q4 refunding announcement today revealed Treasury would look to reduce issuance due to an improving fiscal outlook, but was reluctant to reduce Bill auctions since they only represented 11% of marketable debt outstanding. Instead, Treasury would cut next week's 3yr auction by $1 bn to $26bn, and may look to cut the 2yr auction by $1 bn as well. The size and pace of reductions will depend on the extent of the fiscal improvement, but these new auctions sizes would be kept steady through Q1 2015 if the TBAC's recommendations are accepted.` Regarding the potential for higher cash balances, Treasury already announced on Monday that it would target a $200 bn cash balance for the end of the year, but will continue to analyze the TBAC's recommendation to hold a $500 bn cash balance <b:>`_. The higher cash balance will be achieved mostly with higher Bill issuance, but "Treasury's ability to run higher cash balances in FY 2015 ... may be somewhat constrained by debt limit considerations."" In other news, U.S. News and World Report ranked the top performing Ultra-Short Bond Funds as of 9/30/14 The top 3 are: BBH Limited Duration Fund (1.8% 1-year return), AMG Managers Short Duration Government Fund (1.3% 1-year return), and Metropolitan West Ultra Short Bond Fund (1% 1-year return).
