The SIFMA Quarterly Issuance Survey forecasts total net Treasury bill, note and bond issuance to be $307.0 billion in the second quarter of 2011, approximately 15.8 percent above the net $265.2 billion issued (but 4.2 percent below the $320.5 billion previously forecast in SIFMA’s 1Q’11 issuance survey) in the first quarter of 2011 (actuals include cash management balances). Notably, 4-week bills issuance is expected to drop over 17 percent below 1Q’11 levels.

The economy saw some signs of recovery during 1Q’11 as unemployment levels dipped slightly, consumer spending and confidence grew, and the housing market showed some stabilization. With the Dodd-Frank Act passed into law over nine months ago, the proposed rulemakings are well underway. The uncertainties remain, however, over just how final rules will be implemented, which may be a partial reason for slower pace of the economic recovery.

In addition, the national deficit currently rests at a little over $14 trillion and has been widely predicted to reach the $14.3 debt ceiling before May of this year. As of March 31, the total debt outstanding that is subject to the limit was $14.2 trillion, leaving approximately $76 billion before the debt limit is reached. With the shifting of political parties in both the House and Senate comes a shift in core interests. As investor confidence grows in a sustained economic recovery, priorities in Congress have swung to controlling the deficit and reducing national spending.

About the Report

A quarterly survey of SIFMA’s Primary Dealers and Government Securities Research and Strategist Committees concerning U.S. government issuance and rates forecasts. The committees are composed of trading strategists and research analysts at SIFMA member firms who specialize in the U.S. government and agency securities markets. The survey is intended to provide market participants with the current consensus expectations and median forecasts of many of the primary dealers and other firms active in the U.S. government and agency securities markets.

Credits

SIFMA Capital Markets

• Staff Advisor: Rob Toomey

SIFMA Research

• Research Analyst: Justyna Podziemska