The SIFMA Quarterly Issuance Survey forecast total net Treasury bill, note and bond issuance to be $417.0 billion in the first quarter of 2010, compared with the net $159.5 billion issued in the fourth quarter of 2009 and $481.3 billion issued in the first quarter of 2009 (these actuals include cash management balances). The projected increase in net issuance reflects continued demand for funds to cover government spending for additional stimulus efforts. Although the recession may be over, the economic situation remains weak, and as recently as last month the government announced plans for further job creation efforts, extension of unemployment benefits, and support for the housing market (i.e., extension of the homebuyer’s tax credit).

The survey also forecasts benchmark Treasury yields will decrease going through the first quarter of 2010 before increasing again in the second quarter, relative to levels prevalent at the time the survey was taken. This trend reflects the uncertainty around the demand for relatively safe-haven Treasury debt as the government continues to inject the system with funds to prop up employment and the housing market, and the economy follows a rocky road to sustained growth. The Federal Reserve also plans on ending most of its federal purchase programs by the end of 1Q’2010, which may then drive demand for Treasuries in the near term down and push yields up.

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
• Analyst: Lily Hao

SIFMA Research

• Director of Statistics: Charles Bartlett