dChan
Anonymous ID: 913ff2 May 4, 2020, 1:48 p.m. No.9028316   🗄️.is 🔗kun   >>8330 >>8337 >>8524

US To Borrow A Record $4.4 Trillion In 2020, More Than The Previous Five Years Combined

 

So much can change in three months.

 

Back on February 3, the Treasury in its quarterly announcement of marketable borrowing estimates was delighted to announce that "During the April – June 2020 quarter, Treasury expects to pay down $56 billion in privately-held net marketable debt, assuming an end-of-June cash balance of $400 billion."

 

Well, oops.

 

Fast forward to today, when one global (still ongoing) coronavirus pandemic, and one global economic crisis later, the Treasury now expects to boost the net amount of marketable Treasury debt outstanding by an unprecedented $3 trillion in the April-to-June quarter in order to fund the trillions in stimulus and bailout payments.

 

This is what the Treasury said about its latest borrowing needs:

 

During the April – June 2020 quarter, Treasury expects to borrow $2,999 billion in privately-held net marketable debt, assuming an end-of-June cash balance of $800 billion. The borrowing estimate is $3,055 billion higher than announced in February 2020.

 

According to the Treasury, the surge in borrowing needs is "driven by the impact of the COVID-19 outbreak, including expenditures from new legislation to assist individuals and businesses, changes to tax receipts including the deferral of individual and business taxes from April – June until July, and an increase in the assumed end-of-June Treasury cash balance."

 

But wait there's more because looking at the next quarter (July though September) the Treasury now expects to borrow an additional $677 billion in privately-held net marketable debt, assuming an end-of-September cash balance of $800 billion.

 

In other words, the Treasury will borrow a record $3.7 trillion in the 6 month interval from April to September. This also explains why the Fed - which has already purchased $2.5 trillion in securities in the past 6 weeks - is currently monetizing double the total Treasury net issuance: because it is preparing for precisely this eventuality. Finally, in the first calendar quarter of the year, quarter, the Treasury borrowed $477 billion in debt - $110 billion more than it had originally expected - ending the quarter with a cash balance of $515 billion. US marketable debt borrowing in FY'20 is on track to reach $4.395 tn, up from $1.280 tn in FY'19 or $1.195 tn in FY'18. It is more than the previous five fiscal years combined and almost 2.5x the previous record high borrowing for any fiscal year (FY'09$1.786 tn).

 

https://www.zerohedge.com/markets/us-treasury-borrow-record-3-trillion-quarter