U.S. Treasury Predicts an Increase in Borrowing Needs for Remainder of 2018

The Treasury Department predicted on Monday that the U.S. government’s borrowing needs in the second half of this year will jump to the most since the financial crisis a decade ago. U.S. expects to borrow USD 56 Billion more during the third quarter than previously estimated.

According to Reuters, Treasury said in a report that the department expects to issue USD 329 Billion in debt from July through September, the fourth largest total of that quarter on record and higher than their USD 273 Billion estimate. Treasury forecasted USD 440 Billion for the October-December quarter, bringing the second half borrowing estimate to USD 769 Billion which is the highest since USD 1.1 Trillion in the second half of 2008 according to Bloomberg.

The yield on U.S. 10-year rates increased to almost 2.98% following publication of the borrowing outlook. The two-year rate was steady at around 2.67%, close to its low for the day. The federal government is accumulating bond issuance, notes, sales of bills to cover a budget hole driven by President Trump’s big spending increases after he signed a USD 1.5 Trillion in tax cuts last year.

Administration officials believe a stronger economy will improve government revenue and help shrink the budget deficit. Treasury Secretary Steven Mnuchin said the U.S. economy is “well on the path” for four or five years of sustained growth of 3%.

The second quarter may be a high point for the world’s largest economy and few economists anticipate it to reach Trump’s goal of sustained growth of 3%.

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