The SIFMA Quarterly Issuance Survey forecast total net Treasury bill, note and bond issuance to be $399.0 billion in the third quarter of 2010, compared with the net $343.6 billion issued (and $351.0 billion estimated in SIFMA’s 2Q’10 issuance survey) in the second quarter and $392.5 billion issued in the third quarter of 2009 (all actuals include cash management balances). Overall, the issuance of shorter-term T-bills is expected to rise and longer-term coupon issuance is expected to fall in 3Q’10. The expected rise of total debt issuance in the third quarter may reflect increasing worries regarding stagnant unemployment, a cooling economic recovery, deflationary pressures, and the potential need for additional stimulatory measures by the U.S. government.

The survey also forecasts benchmark Treasury yields will increase going through the third as well as fourth quarters of 2010 relative to levels prevalent at the time the survey was compiled. However, this increase is from dramatically lower baseline yield levels during the second quarter, than when the previous survey was completed. A combination of international sovereign debt worries, deterioration in some housing markets, and stubbornly high unemployment rates contributed to increased market volatility and uncertainty throughout the second quarter, driving the demand for relatively safe haven Treasuries.

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