J.P. Morgan Securities' latest "Short-Duration Strategy Weekly" says, "Against this stable backdrop, perhaps the most notable development this week was Treasury's Quarterly Refunding announcement. Minutes to the TBAC meeting noted Treasury's plans to restore its operating cash balance to a more prudent level by the end of this year (once the debt ceiling legislation is passed), which would require Treasury to increase its net marketable borrowing to more than $500bn in 4Q17. This is a much more aggressive issuance schedule than was attempted in the months following the last debt ceiling deadline in November 2015, and would represent the heaviest quarter of supply since 2008.... More importantly, a significant portion of this funding need will likely come in the form of bills, whether via the regular weekly auctions and/or cash management bills. Specifically, our Treasury strategists estimate that about $360bn (or 70% of Treasury's anticipated 4Q funding needs) will be in the form of bills, with the rest coming in the form of increased coupon auction sizes. Net T-bill issuance of this magnitude would represent a 20% increase in the amount outstanding. Furthermore, it's worth noting that Treasury's funding needs are expected to rise to nearly $1tn by FY 2021 (on the back of Fed balance sheet normalization and an increased budget deficit), suggesting that the additional bill supply is likely to stay for some time to come."

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