Rates Spark: Refunding Decision(s) Potentially Pivotal

2025-02-05 04:15:00 ET

Summary

• We’ll see Wednesday whether new Treasury Secretary Scott Bessent chooses to make a statement through material actions or words as his new department unveils the latest re-funding decision(s).
• The baseline view is for no surprises. If there are surprises, it's more likely to be negative for Treasuries than positive. For that reason, the smart money is for him not to rock the boat.
• Recovering from the initial tariffs scare, markets may have room to refocus on the actual data - at the forefront is the US jobs market.

By Padhraic Garvey, CFA and Michiel Tukker

US re-funding announcement a key driver for the quarter ahead

There's been a change of Treasury Secretary since we had the last re-funding announcement in October 2024. New Treasury Secretary Scott Bessent could use the re-funding announcement due 8:30am (EST) Wednesday as an opportunity to impact guidance, if not the volumes themselves. The financing plans released on Monday contained nothing startling that could necessitate a change in the expected re-funding numbers, with the dominant view seeing a broad repeat of the sizes seen in the previous quarter....

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