SIFMA Issues Quarterly Government Securities Issuance and Rates Forecast for 3Q 2015

Release Date: July 30, 2015

Contact: Katrina Cavalli, 212.313.1181, [email protected]

SIFMA Issues Quarterly Government Securities Issuance and Rates Forecast for 3Q 2015

New York, NY, July 30, 2015-SIFMA today issued its quarterly government securities issuance and rates forecast for the third quarter of 2015.

Highlights of the forecast include:

SIFMA forecasts total net Treasury bill, note and bond issuance to be $186.5 billion in the third quarter of 2015, 229.7 percent higher than the $56.6 billion issued in the second quarter of 2015 (actuals include cash management balances).

Survey respondents forecast that the Treasury will issue $38 billion of Treasury Inflation-Protected Securities (TIPS) in the third quarter, down 0.2 percent from the $38.1 billion issued in the second quarter of this year.

The median forecast for net issuance of Treasury coupon securities is $161.5 billion for the third quarter, 15.8 percent above the second quarter of 2015’s net issuance of $139.5 billion.Survey participants expect to see net billissuanceof $25.0 billion in the third quarter, much higher than the net redemption of $82.9 billion in the second quarter.

While the forecast of coupon issuance was uniform among survey respondents, the expectations for the net bill issuance varied widely among the survey respondents, showing no consensus in the direction or the scale of net bill issuance in the third quarter.

Survey participants forecast total gross coupon issuance by the four largest Federal agencies to increase by 80.9 percent to $163.0 billion in the third quarter of 2015. The projections reflect an increase in all four agencies issuance.

The survey asked participants about risks to their forecasts or events that could cause interest rates to move higher or lower than forecasted.

The main risks to the forecast identified on the upside (higher-than-expected yields) remained consistent from the previous quarter: stronger pickup in inflation, stronger than expected Euro economic rebound, more hawkish Fed, and stronger than expected recovery in commodity prices.

In contrast, the main risks noted on the downside (lower-than-expected yields) were: the Fed not increasing interest rates in 2015, US economic deterioration, financial contagion from Europe, US dollar strengthening, and fall in inflation.