Treasury to borrow $96 billion in fourth quarter U.S. plans to borrow record $171 billion in first quarter By Rex Nutting, MarketWatch Last Update: 4:42 PM ET Oct. 31, 2005 Disable MW live quotes | E-mail it | Print | Alert | Reprint |
WASHINGTON (MarketWatch) - The U.S. government plans to borrow a net $96 billion in marketable securities in the fourth quarter, the Treasury Department said Monday.
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For the first quarter of 2006, the Treasury anticipates borrowing a record $171 billion from the markets, as the bill to finance Gulf Coast rebuilding adds up.
This will top the $144 billion borrowed in the first quarter of 2005 and $146 billion borrowed a year earlier.
The high borrowing estimate could put upward pressure on yields, thus raise consumer and corporate borrowing costs, analysts at Action Economics said.
Treasury borrowed $52 billion in marketable debt in the just-concluded third quarter.
The government borrowed $216 billion in the markets in fiscal year 2005, down significantly from $380 billion in 2004. The improvement was due to stronger-than-expected receipts and record borrowing of $67 billion from state and local governments.
Three months ago, the Treasury said it would likely have to borrow $97 billion in the fourth quarter. The government entered the fourth quarter with about $6 billion more in cash on hand than it had anticipated.
The Treasury will announce the details of its quarterly refunding auctions on Wednesday. The government will sell 3-, 5- and 10-year notes next week to provide much of the money it needs this quarter.
Most analysts look for increased spending to be met, at least initially, by increased short-term bill issuance, allowing longer-term or "coupon" issuance, which costs the government more in interest, to remain about where it has.
Steve Stanley, economist at RBS Greenwich Capital, looks for $18 billion in 3-year notes and $13 billion each of 5- and 10-year notes, for a total of $44 billion to go on the block.
Lehman Brothers offers the same prediction.
In comments to the borrowing advisory committee, Assistant Treasury Secretary Mark Warshawsky said the Bush administration is "optimistic that future real growth will remain solid with continued gains in payrolls jobs."
The Treasury's top economist said the administration agrees with private forecasters who are predicting economic growth above 3% in the current quarter and about 3.5% in the first half of 2006.
Stronger growth could plump up the government's tax collections, helping it to hold down debt issuance. Slower growth could force greater issuance
