(Bloomberg) -- The US Treasury ramped up its estimate for federal borrowing for the current quarter to $243 billion, more than most dealers had anticipated, in a move that largely reflected weaker cash receipts than officials had expected.

The Treasury Department said in a statement Monday its net borrowing for April-through-June is now seen at $41 billion more than the previous prediction of $202 billion, released in late January. US debt managers reiterated their earlier estimate for the Treasury’s cash balance for the end of June, of $750 billion.

The increase was “largely due to lower cash receipts,” which were partly offset by a higher cash balance at the start of this quarter, the Treasury said. That news may come as a surprise to some budget watchers. Strategists at Societe Generale SA had anticipated a reduction in the borrowing estimate to $166 billion, in part on an improvement in the fiscal deficit.

Treasury yields briefly pared their declines on the day after the Treasury’s release. Ten-year yields were about 4.62% as of 3:16 p.m., from as low as about 4.61% earlier.

The upward revision was “somewhat surprising,” said Zachary Griffiths, head of US investment grade and macro strategy at CreditSights. “Still, a $41 billion revision for Treasury is a rounding error with the level of debt and deficits we’re dealing with. The market reaction indicates there is still a fair bit of sensitivity around the fiscal situation in the US — although this really does not change anything from a longer-run perspective.”

Fed QT

Treasury officials didn’t incorporate any expectation for the Federal Reserve to slow the pace of its run-off in Treasuries holdings, currently set at up to $60 billion a month. The Fed is widely expected to announce a tapering in that so-called quantitative tightening program at its policy meeting Wednesday, while dealers have differing projections on when the scale-back will start.

“The Treasury won’t front-run the Fed’s QT announcement on Wednesday, so the pro forma financing estimates on Monday are likely to assume that SOMA runoffs will continue unabated over the forecast horizon,” Lou Crandall at Wrightson ICAP LLC wrote in a note before the Treasury’s Monday release, using an acronym referring to the Fed’s Treasuries holdings.

While JPMorgan Chase & Co.’s had been among those predicting an increase in the borrowing estimate, Monday’s figure exceeds their $227 billion prediction. Their estimate incorporated an assumption that Fed QT for Treasuries would be halved, beginning in May.

Later this week, the Treasury will announce its so-called quarterly refunding plan, where dealers expect the department to keep the size of note and bond auctions steady. Wednesday’s announcement will come just hours ahead of the Fed’s own policy statement.

Read More: US Debt-Sale Plan Seen Benefiting From Fed That ‘Stops Hurting’

The Treasury’s cash balance was about $908 billion as of April 25, compared with $844 billion on Jan. 29, when the department released its initial financing projections for the quarter.

US debt managers’ upcoming plans for a debt buyback program “are not expected to significantly affect privately held net marketable borrowing, as new issuance replaces securities that are bought back,” the Treasury said Monday. Most dealers expect the Treasury to announce on Wednesday the exact start date for its new buyback program.

Read more: Why the US Treasury Will Start to Buy Back Its Bonds: QuickTake

For the July-to-September quarter, the Treasury on Monday said it expects to borrow a net $847 billion, with a cash balance of $850 billion seen for the end of the period.

(Adds market reaction, strategist’s comments and more detail from report, starting in fourth paragraph.)

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