(Bloomberg) -- The US Treasury pared back its estimate for federal borrowing for the current quarter, while reiterating its previous assumption for cash balance at the end of March — assuming that Congress acts to raise or suspend the debt limit.
The Treasury Department said in a statement Monday that it now estimates $815 billion in net borrowing for January through March, down slightly from the $823 billion it had penciled in back in October. The reduction was mainly thanks to having more cash than expected at the start of the quarter, it said.
The estimates are part of the US debt management team’s so-called quarterly debt refunding package, which Scott Bessent takes the helm of for the first time as President Donald Trump’s Treasury secretary.
Officials’ quarter-end cash estimate was $850 billion, the same as last time — a figure that assumes Congress will raise or set aside the federal debt limit, which it has yet to do. The federal debt cap kicked back in at the start of January. Any drawn-out episode in Congress over raising or suspending the limit will force the Treasury to slash bill issuance and spend down its cash buffer.
The Treasury’s cash balance stood at about $826 billion as of Thursday.
For the April-through-June quarter, the Treasury said it expects to borrow a net $123 billion, assuming an $850 billion cash balance at the end of the period. The figures again assume that the debt limit gets addressed.
Some Treasury watchers have flagged the potential for the department to shift toward maintaining a smaller cash stockpile over time, though Monday’s estimates don’t reflect any such consideration.
Wrightson ICAP economist Lou Crandall is among those who have mentioned that potential. Ahead of Monday’s statement, he estimated $820 billion in borrowing for the current quarter, with an end-of-period cash balance of $850 billion.
Anshul Pradhan, head of US rates strategy at Barclays, forecast that the January-through-March borrowing figure would be $800 billion, with the cash balance target set at $850 billion.
On Wednesday, the department will announce its plans for note and bond sales over coming months — which dealers widely see as staying unchanged. Yet, given outsize US fiscal deficits, dealers see increased sales of longer maturities is inevitable at some point.
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